DEFINITION of 'Comparables'

Comparables are used in a valuation technique in which a recently sold asset is used to determine the value of a similar asset. Comparables are a list of recent asset sales that reflect the characteristics of the asset an owner is looking to sell. Usually, the list of sales is for the last 12 months. The idea is that recent sales of similar assets will likely reflect the current market for the asset and be a good indicator of the possible sale price. This technique is often used in real estate to determine the initial sale price of a property.

BREAKING DOWN 'Comparables'

Using comparables for valuation is helpful for accurately appraising any asset. For example, a real estate agent may appraise the value of a home based on the most recent selling price of a house in the same neighborhood with similar attributes, such as square footage and the number of bedrooms and bathrooms.

Example of Comparables Valuation

For example, Bert wants to sell his house. He enlists the help of Steve who is a realtor. After taking a walk-through of the house, Steve pulls comparables for the last 12 months for houses similar to Bert's in his neighborhood. These comparables are used to determine the list price for Bert's house.

RELATED TERMS
  1. Selling Away

    Selling away is when a broker solicits a client to purchase securities ...
  2. Commuted Value

    Commuted value is the present value of the future series of cash ...
  3. Sales Comparison Approach - SCA

    The sales comparison approach is an appraisal method that compares ...
  4. Appraisal Approach

    The appraisal approach is a procedure for determining an asset's ...
  5. Stock Ahead

    Stock ahead refers to a situation in which an order is placed, ...
  6. Undue Influence

    Undue influence occurs when an individual is able to persuade ...
Related Articles
  1. Investing

    How to Price Your Home Like the Pros

    Selling a house without using a realtor can be a difficult task. Thankfully the internet has made it easy to list a home like the pros do.
  2. Managing Wealth

    Asset Manager Ethics: Valuation Is A Tricky Business

    Asset managers must accurately represent all of a clients assets in the client portfolio. This can be tricky for unique and hard-to-value assets.
  3. Investing

    What You Should Know About Real Estate Valuation

    Accurate real estate valuation is important to mortgage lenders, investors, insurers, and buyers and sellers of real property.
  4. Investing

    What you should know about home appraisals

    Before you buy or sell a home, you need to have an unbiased professional opinion of the home's value. Home appraisal can help you to determine the value of your home purchases. Check out the ...
  5. Investing

    Find the Right Home Appraiser: A Quick Guide

    Locating the best home appraiser can mean a house valuation that's thousands of dollars higher than one that's done on the cheap.
  6. Investing

    Learn to Value Real Estate Investment Property

    Make sure you know what your real estate investment is worth before you sign the ownership papers. Learn what capitalization rate means to your net operating income.
  7. Investing

    Relative Valuation: Using Stocks To Value Other Stocks

    This effective approach will help you understand which stocks you should be investing in.
  8. Managing Wealth

    7 Ways To Increase Your Home's Appraisal Value

    When it's time to sell your home – or refinance – it will need to be appraised. Here's how to make sure the valuation is as high as possible.
  9. Investing

    10 Tips for Getting a Fair Price on a Home

    When the housing market booms, it's tougher than ever to get a good price. Make sure the house you choose is worth the price you pay. Here are some tips on how to do that.
RELATED FAQS
  1. How is market value determined in the real estate market?

    Learn how fair market value is determined during a real estate appraisal and how market values are really decided by professional ... Read Answer >>
  2. Do home appraisers use Zillow?

    When it comes to assessing a home for sale, licensed appraisers rely on detailed —and sometimes proprietary—information to ... Read Answer >>
  3. Are stocks real assets?

    Learn why stocks are classified as financial assets, not real assets. Understand the properties that determine whether an ... Read Answer >>
Hot Definitions
  1. Business Cycle

    The business cycle describes the rise and fall in production output of goods and services in an economy. Business cycles ...
  2. Futures Contract

    An agreement to buy or sell the underlying commodity or asset at a specific price at a future date.
  3. Yield Curve

    A yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but ...
  4. Portfolio

    A portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, also their mutual, exchange-traded ...
  5. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  6. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
Trading Center