Comps & ARV Mastery for Real Estate Investors

A bad comp costs you money in one of two directions. Overvalue the property and you overpay. Undervalue it and you lose the deal to a competitor who ran better numbers. Getting comps right is the most important skill in real estate investing.

A good comp meets five criteria. First, proximity. It sold within a half mile of your subject property, ideally in the same subdivision or on the same street. Second, recency. It closed within the last six months. In fast-moving markets, tighten that to three months. Third, similarity. Comparable bed count, bath count, and square footage. Stay within 20% of your subject on square footage. A 2,400 square foot comp is not useful for a 1,200 square foot subject.

Fourth, condition. If your subject will be fully renovated, your comps should be recently renovated properties, not distressed sales. Comparing your future finished product to a bank-owned property sold as-is gives you a false ARV. Fifth, sale type. Use arms-length transactions only. Filter out foreclosures, short sales, and family transfers unless you are specifically looking for distressed values.

FlipMantis pulls comps from ATTOM data and plots them on a map. You can see exactly where each comp sits relative to your subject. Properties across a major highway or railroad tracks might be technically close but in a different micro-market. The map view catches that instantly.

No two properties are identical. You adjust comp values to account for differences between the comp and your subject property. This is exactly what appraisers do, and learning the process makes your numbers more accurate than investors who just average three sale prices.

Start with square footage. If your subject is 1,500 sqft and the comp is 1,700 sqft, the comp is 200 sqft larger. Look at the price per square foot for renovated properties in the area. If it is $120/sqft, deduct $24,000 from the comp price. Now the comp reflects what a 1,500 sqft property would have sold for.

Bedrooms and bathrooms get flat adjustments. A comp with an extra bedroom over your subject typically gets a $5,000 to $15,000 deduction depending on the market. An extra full bathroom is $5,000 to $10,000. Half bath, $2,500 to $5,000. These ranges vary by market, so pay attention to what the data in your area shows.

Features matter. A comp with a pool when your subject has no pool needs a deduction. A comp with no garage when your subject has a two-car garage needs an addition. Lot size differences, age differences, and finish level all factor in. FlipMantis lets you add line-item adjustments to each comp and saves them to your underwriting file.

After adjustments, your three to five comps should cluster around a tight range. If they are spread from $140,000 to $220,000, your comps are not comparable enough. Tighten your selection criteria. A good adjusted range should be within 10% of the median.

ARV is not a guess. It is the number your adjusted comps support, and you should be able to defend it to a lender, a partner, or yourself when the deal is on the line.

Take your adjusted comp values and find the range. If your five comps adjusted to $155,000, $158,000, $162,000, $165,000, and $170,000, your range is $155K to $170K. The median is $162,000. That is your moderate ARV.

Run three scenarios. Conservative uses the lower end of your comp range. This is the number you underwrite against. If the deal works at $155,000 ARV, it works. Moderate uses the median. This is your expected outcome. Aggressive uses the upper range. This is what happens if everything goes right and the market cooperates.

Never underwrite against the aggressive number. Investors who build their MAO around the highest comp are the ones who lose money. The market does not owe you the best-case scenario. Build your offer around conservative ARV, and treat anything above that as upside.

FlipMantis shows all three scenarios in the underwriting calculator. Plug in your comps, make your adjustments, and the tool shows conservative, moderate, and aggressive ARV with the corresponding MAO for each. Your offer should be based on conservative. Your pitch to a lender can reference moderate. And aggressive stays in your back pocket as the upside case.

Document everything. When you close the deal six months from now, compare your ARV estimate to the actual sale price. That feedback loop is how you get better at valuation over time.

Every experienced investor has a story about a deal that went sideways because the ARV was wrong. Here are the mistakes that cause it.

Cherry-picking comps. You find seven comps and only use the three highest because they support the deal you want to do. This is confirmation bias and it will cost you. Use all relevant comps, even the ones that hurt your thesis. If a comparable property sold for $30,000 less than the others, figure out why before you throw it out.

Using outdated sales. In a declining market, a comp from eight months ago might be 5% higher than current values. In an appreciating market, it might be 5% low. Always weight recent sales more heavily. If your most relevant comp is nine months old, look for newer data even if the newer comps are slightly less comparable.

Ignoring micro-markets. Two streets can look identical on a map but have different values. One might back up to a busy road. One might be in a different school zone. One might have a registered sex offender on the block. Drive the comp neighborhood and drive your subject neighborhood. What you see from the street tells you things the data cannot.

Forcing the deal. When you cannot find comps that support your number, that is the market telling you something. Either the property is overpriced, the neighborhood does not support the value you need, or the rehab scope is too aggressive. Walk away. The next deal is out there, and it will have comps that work.

FlipMantis flags comp outliers automatically. If one of your comps is more than 15% away from the median, the platform highlights it so you can investigate before it skews your analysis.