Comps (Comparable Sales)
Recently sold properties similar to a subject property in location, size, age, and condition, used to estimate what the subject is worth. Appraisers, agents, and investors adjust comp prices up or down for differences before settling on a value. The quality of a valuation is only as good as the comps behind it.
Related terms
ARV (After-Repair Value)
The estimated market value of a property after planned renovations are complete. ARV is usually derived from comparable sales of already-renovated properties nearby. Flippers and BRRRR investors work backward from ARV to set a maximum purchase price and renovation budget.
Appreciation
An increase in a property’s market value over time, whether from market conditions, inflation, or improvements the owner makes (often called forced appreciation). Unlike cash flow, appreciation is unrealized until the property is sold or refinanced. Values can also fall — appreciation is a possibility, not a guarantee.
Due Diligence
The investigation a buyer performs before completing a purchase: inspections, title review, verifying leases and income, checking taxes, insurance costs, and anything else that could change the deal’s math. Purchase contracts often include a due-diligence or inspection period during which the buyer can renegotiate or exit under the contract’s terms.