A comparable sale is a closed transaction used as evidence of what a subject property is worth. The sale itself is only the raw material: it becomes evidence after it is adjusted for the ways it differs from the subject, in size, condition, location, unit mix, timing and the terms it traded on.
- Closed, not asking. An asking price is an opinion; a closed sale is the only evidence somebody actually paid.
- Read the terms, not just the number. Seller financing, a leaseback or a portfolio allocation can make a headline price unusable.
- Every adjustment should have a reason a skeptical reader would accept. If it cannot be said out loud, it should not be applied.
- Three defensible comps beat twelve decorative ones. Volume is not the same thing as evidence.
One closed sale nearby, adjusted to the same eight-unit subject: a net 10% down for condition and location.
The sale was a fact and the adjustment was a judgment, and the judgment is what a price has to defend when someone argues with it.
Related terms
All termsSubmarket
A submarket is the smallest area within which properties genuinely compete for the same tenant and the same buyer.
InvestmentPrice Per Unit
Price per unit is the total price divided by the number of dwelling units.
InvestmentCap Rate (Capitalization Rate)
The capitalization rate is a building's net operating income divided by its price, expressed as a percentage.
Terms arrive with the writing.
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