If you want to know how to comp a flip, start with the idea that you are not pricing a house. You are pricing two houses: the one your investor client is buying today, and the one they will sell after the renovation. Each needs its own set of comparable sales, and the rules for choosing them are stricter than the ones you use for a listing appointment.
The short version: for the finished value, use only closed sales of renovated homes of the same type, close by, recent, and similar in beds, baths and square footage, finished to roughly the level the rehab budget actually buys. For the purchase side, use as-is sales in similar condition. Ignore active listings for value, keep distressed sales out of the after repair set, and present all of it in a package an investor and a lender can check line by line.
This guide is written for agents pulling comps for investor clients. If you want the investor side of the same math, the walkthrough on how to calculate ARV covers how a buyer should build and stress the number. Here the focus is different: what changes when you are the one assembling the evidence, and how to hand it over so it survives the investor's underwriting and the lender's.
Why ARV comps are not retail comps
When you price a listing, you comp the house as it is against the market as it is. Updated and dated homes both go in the pile, and you reconcile the spread with your judgement about the subject.
A flip does not work that way. The investor's profit is the gap between two products: a house that needs work and a house that does not. If your comp set blends the two, you have averaged across exactly the difference your client is paying to capture.
That is why a retail CMA almost always gives an investor the wrong number in both directions. Unrenovated sales in the mix drag the finished value down, so your client passes on a deal that worked. A couple of high-end gut rehabs in the mix push it up, so your client overpays for a house whose budget will never produce that finish.
I have bought, renovated and sold these projects myself, and the comp set is the first place a flip goes wrong. Rarely through dishonesty. Usually through an agent doing the familiar job well when the job was different.
How to comp a flip: the ARV set
Renovated sold comps only
Pull closed sales only, and within those, only homes that sold in renovated condition. Read the remarks and look at the photos. "Updated kitchen" in 2009 is not updated. A fresh coat of paint over original baths is not a renovation.
The test is simple: would a retail buyer walking through this comp and then the finished flip see the same product? If not, it does not belong in the set.
Match the comp to the budget, not to the best sale
This is the step agents skip most. Ask your client for the scope of work before you pull comps, then match finish level to it. A scope of paint, flooring, a mid-grade kitchen and one bathroom produces a different house from one with a new layout, a second full bath and a finished basement.
If the comps were finished to a higher standard than the budget allows, they are not comps for this deal. A lender will notice, and so will the appraiser. Appraisers on fix and flip loans review the budget and scope alongside the comps and question a budget that cannot deliver the value it is meant to create. If your client needs help sizing a scope against the finished value, the rehab cost calculator is a quick way to sanity check whether the budget and the comps describe the same house.
Tight radius, recent window, same property type
Set the boundaries before you search, so the prices do not choose them for you:
- Radius. As tight as the data allows. Same subdivision or the same few blocks in a dense area. Never across a boundary buyers care about: a school district, a town line, a highway, a rail line.
- Time. Closed recently enough to describe today's market. If you have to reach back further because the area is thin, say so in writing.
- Property type. A twin is not a single. A condo is not a townhouse. A row home in a 1920s grid is not a 1990s colonial at the same square footage.
Beds, baths and square footage
Keep comps close to the finished subject in bedroom count, bathroom count and above-grade finished square footage. Keep the size difference small where you can. Note basements separately: a finished basement and above-grade living space are not valued the same way in most markets.
Use the finished configuration, not the current one. If the scope adds a bathroom, the subject is a three bed, two bath for ARV purposes, and the comps should be too. If the scope does not add it, do not comp as though it does.
Condition and finish adjustments
You will not find identical houses, so adjust each comp toward the subject. The usual items are bed and bath count, size, garage, lot, basement, and the level of finish. Adjust the comp, never the subject. If a comp has a garage the flip will not, its price comes down to reflect that.
Two details that get missed:
- Concessions. If a comp closed with significant seller paid costs, the headline price overstates what the buyer really paid. Appraisers are expected to identify and account for concessions, so note them in your package.
- Who sold it. A comp that was itself a flip is often the best evidence you will find, because it is the same product sold to the same kind of buyer. Flag those.
What to throw out
Active listings
An active listing is an asking price. It tells you what a seller hopes for, not what a buyer paid. Keep actives out of the value entirely.
They still matter, just for something else: they are the competition the finished flip will be listed against. Five renovated homes sitting unsold on the same street is information about the exit, so include them in a separate section on competing inventory and days on market.
Pending sales sit in between. They show a price was agreed, but you will not know the final number until they close. Mention them as a signal; do not count them in the ARV.
Distressed sales
Foreclosures, short sales, estate sales of untouched houses and anything sold to an investor at a discount are a different product from a renovated retail home. They do not belong in the ARV set.
They do belong somewhere, which is the next section.
The other half: as-is comps for the purchase side
The after repair value tells your client what the house is worth when it is done. The as-is value tells them whether the purchase price makes sense today, and a lender cares about both. A fix and flip appraisal typically reports two values, the current condition and the after repair value, each supported by its own set of sales.
For the as-is set, the logic reverses. Now the distressed sales, the dated estate homes and the investor purchases are your best evidence, because they are the same product as the subject. Match on condition first, then location, size and type. A house with a failed roof and original systems should be compared with other houses that needed the same scale of work, not with a tidy dated ranch that a retail buyer could move into.
Presenting both sets makes your client's case stronger. It shows the spread between the two products is real and supported, rather than a hopeful finished number sitting on top of whatever price was agreed.
How to present a comp package an investor and a lender will trust
An investor will run your comps through their own underwriting, and a lender will run them again. The package that survives both is boring, complete and honest. A consistent format also saves you time, because you stop rebuilding it for every property.
What goes in it
- The subject, as is and as planned. Address, current beds, baths and size, condition notes written plainly, and the finished configuration the scope will produce.
- The ARV set. Three to five renovated closed sales, each with address, close date, price, beds, baths, square footage, distance from the subject, and a line on finish level and any concessions.
- The adjustments. What you adjusted and why, comp by comp. One line each is enough.
- The as-is set. Three to five sales in similar condition supporting the purchase price.
- What you left out and why. The high sale across the district line. The gut rehab with a finished attic. The REO two streets over. Listing the exclusions shows you were not choosing comps to fit an answer.
- Competing inventory. Renovated actives and recent days on market for the finished product.
- Your reconciled range. A range, not a single number, with the cluster you would defend.
Include the comps that argue against the deal
This is the part that feels wrong if you are used to selling a property, and it is what makes you worth calling again. Your client and their lender will find the unfavorable sales anyway. If they come from you first, you are the agent whose numbers can be trusted. If they come from the appraiser after the investor is under contract, you are the agent whose numbers cost them money. The same principle runs through working with investor buyers generally: the investor is buying the numbers, so the numbers are the service.
Run the arithmetic before you send it
Once you have a reconciled range, drop the low end into the ARV calculator along with the purchase price and the budget. If the deal only works at the top of your range, tell your client that in plain words. That one sentence is worth more to an investor than the comp grid itself.
Common comp mistakes that blow up flips
Comping the listing, not the flip. A retail CMA with mixed condition comps gives the wrong finished value. Separate the two products every time.
Comping above the budget. The comps were full gut rehabs. The scope is cosmetic. The finished house will sell like the cosmetic flip it is, not like the comps.
Counting a bathroom that is not being built. If the scope does not add the bath, the comps should not have it.
Crossing a boundary. Two blocks away in a different school district is not two blocks away to a buyer, and an appraiser will not treat it that way either.
Letting one sale set the number. The highest comp is the one everyone remembers. Take the cluster. If one sale sits well above the others, find out why before it moves your range.
Stale sales in a moving market. A sale from well over a year ago describes a different market. If you need it, label it and weight it lightly.
Using actives as value. A street full of hopeful asking prices is not evidence of anything except competition.
Ignoring days on market. A finished value that takes months to achieve costs the investor carry, and carry comes straight out of profit. Report how long renovated homes have actually taken to sell.
Where the lender fits in
A hard money lender reads the comp set as closely as the investor does, because the loan is sized off the property rather than off the borrower's paycheck. When a deal comes to me, the comps and the scope of work are read together: does the budget produce the house the comps describe, and do the as-is sales support the price. How much I can lend against purchase and rehab is set per deal and stated in the written term sheet, and it depends heavily on how well those two pieces line up.
Agents who send a clean package make that read faster for everyone. For more on how investors and their financing fit into your business, the resources for agents page collects the guides written for you.
If you have a client with a property and a comp set ready, the quickest next step is for them to get pre-approved so their offer arrives with financing already lined up.