Running comps for a wholesale deal (without botching your ARV)

Every deal you ever blow up will trace back to one number you got wrong: the After-Repair Value. Run your comps loose and your ARV is fiction ... you overpay the seller, your cash buyer walks, and your assignment fee evaporates. Run your comps tight and the whole deal holds. Running comps is the single most transferable skill in off-market real estate, and most people never actually learn it. Here's how to do it right, brick by brick.

First, the honest part

Comping is an estimate, not an appraisal. A licensed appraiser or a broker's CMA carries weight your spreadsheet doesn't, and valuation rules and wholesaling laws vary by state ... some activity may require a license. This is educational content, not legal, tax, or investment advice, and we're not your attorney. Before you tie up a property or quote a buyer a number, do your own diligence and talk to a local real estate attorney. Results vary; nobody on the internet can promise you a payday.

What a "comp" actually is

A comp ... short for "comparable sale" ... is a property similar to your subject that already sold, recently, nearby. The sales comparison approach is how a house gets a number put on it, and on an FHA-insured mortgage it isn't optional. HUD Handbook 4000.1, II.D.4(3), the Sales Comparison Approach, is blunt about it. "The sales comparison approach is required for all appraisals." On the conventional side, Fannie Mae Selling Guide B4-1.3-08, Comparable Sales, sets the tests a comp has to pass, and B4-1.3-09, Adjustments to Comparable Sales, governs how you adjust one.

None of those is law for an investor. They are the clearest public statement of how comps get chosen for the loan your end buyer is going to need, which is exactly why they are the ones worth copying.

Two words matter. Sold ... not listed, not "for sale," not Zillow's automated guess. A list price is a wish; a sold price is a fact. And arm's-length ... a normal sale between unrelated parties, not Grandma deeding the house to her grandkid for a dollar. Those transfers will wreck your average if you let them in.

The 6 rules of a true comparable

Not every nearby sale is a comp. A real comparable passes all six tests below. Where a rule comes from a lender program, we name the program. Where the number is tighter than the program requires, we say so, because that part is our choice and not anybody's requirement.

1. Sold, not listed. Closed transactions only. Fannie B4-1.3-08 puts listings exactly where they belong, saying "contract offerings and current listings can be used as supporting data, if appropriate." Supporting data is not one of your three. Pendings and actives are clues.
2. Recent, with the program named. Fannie B4-1.3-08 says comps that closed within the last 12 months should be used, and allows older sales when market conditions limit the recent ones, with an explanation. Freddie Mac 5605.6(g) requires written "commentary on the reasons for using any comparable sales that are more than six months old." FHA appraisers work to a preference for "the most recent and relevant sales, preferably within the last six months," plus at least three sales settled within 12 months (HUD Handbook 4000.1, II.D.4(3)(c)). Fannie has no six-month rule at all, so nobody gets to call one "the rule." Newest is also not automatically best. Fannie's own example prefers a nine-month-old sale that needs one time adjustment over a one-month-old sale that needs several.
3. Close, with no radius to hide behind. Neither Fannie nor Freddie sets a mileage limit. Fannie has the appraiser report the distance to each comp in miles with a compass direction, "measured using a straight line between the properties," and it allows rural comps "a considerable distance away" when the result is still credible and the reach is explained. What Fannie does forbid is moving the goalposts, because "the appraiser must not expand the neighborhood boundaries just to encompass the comparables selected." Draw your market area first, then go find sales inside it, and do not move the boundary to reach a comp. A hard edge (a highway, a school-district line, a different subdivision) changes what buyers pay even at 300 feet.
4. Similar size. Fannie B4-1.3-08 says a comp should share the subject's physical and legal characteristics, "including, but not limited to, site, room count, finished area, style, and condition," and be competitive for the same buyers. It puts no percentage on finished area at all. Either way, a 1,000-sq-ft ranch is not a comp for a 2,400-sq-ft two-story.
5. Similar type and age. Single-family compares to single-family; a 1920s bungalow isn't priced like new construction.
6. Arm's-length, and the exception most courses skip. A family transfer for a dollar is not evidence of anything and never belongs in your set. Distressed sales are a different animal, and lumping the two together is a mistake. Fannie B4-1.3-08 allows foreclosure and short-sale comps when they are the best and most appropriate sales available, with the condition differences and any stigma addressed. FHA requires arm's-length comps "except when there is evidence that REO sales or short sale/Pre-Foreclosure Sale (PFS) transactions are so prevalent that normal Arm's Length Transactions are not present or supported by the market trend" (HUD Handbook 4000.1, II.D.4(3)). FHA does draw one hard line. A foreclosure transfer to the lender itself "is not evidence of the Market Value," so the deed that moves a house to the bank is never your comp. Read that both ways. In an REO-soaked market a distressed sale can be the honest comp, and in a normal market it is not automatically the as-is benchmark either.

Fannie's floor is concrete. "A minimum of three closed comparables must be reported in the sales comparison approach" (B4-1.3-08). Get three to five sales that clear all six tests and you've got a comp set you can defend.

Where we run tighter than the programs, that is a choice and not a citation. Ours are the last 3 to 6 months, about half a mile, and finished square footage within about 10 percent, where those sales exist. Those are our screens, not anybody's rule, and no primary source sets them.

Pulling comps without an MLS

Wholesalers usually don't have direct MLS access. You don't strictly need it ... you need sold data, and a lot of it is public or accessible:

• County recorder / clerk of deeds. Deeds are public record, and recorded sale prices and dates live here. This is your free source of truth for what actually closed (some states are non-disclosure, where prices aren't recorded ... know which one you're in).
• County assessor / property appraiser. Square footage, bed/bath, lot size, year built, and often the sale history. Free, and it's where you confirm your subject's specs too.
• A wholesaler-friendly agent. The fastest path to clean sold comps is a relationship with an agent who'll pull the MLS for you. Bring them buyers and it's a two-way street.
• Paid data tools. When speed and rigor matter, paid sold-comp data earns its keep on every deal it saves you from.

This is the same public-data muscle that finds the deal in the first place ... see how to find off-market properties with no money. On Squatters, Recon pulls public property and market signals into one place so you spend your time on the comps that matter instead of digging through ten county websites.

Making adjustments (this is where it gets real)

No two houses are identical, so you adjust each comp toward your subject. You're answering one question. What would this comp have sold for if it were exactly like my house? The comp is the thing that actually sold, so the comp is the thing that moves. Adjust the comp, never the subject.

• If a comp has something better than your subject (extra bedroom, finished basement, new roof, bigger lot), you subtract value from the comp.
• If a comp has something worse (older kitchen, smaller, no garage), you add value to the comp.

Common line items are square footage (a per-foot adjustment), bed/bath count, garage, lot size, condition, and updates.

Two things about adjustments that most courses get backwards, both settled in writing by the lender rulebooks.

There is no 15% net / 25% gross adjustment cap. That number gets repeated as gospel and both government-sponsored enterprises disclaim it. Fannie Mae B4-1.3-09 says "Fannie Mae does not have specific limitations or guidelines associated with net or gross adjustments," and Freddie Mac 5605.6(a) says "Freddie Mac does not have limitations on gross or net adjustment percentages." What Fannie does police is where your number came from. The same section calls a $20-per-square-foot rule-of-thumb adjustment inappropriate when market analysis supports $100 per square foot. The adjustment has to be what the market actually paid for that difference, not a figure you're comfortable with. Big adjustments aren't banned either. Fannie's position is that when they're large enough to suggest the property may not conform, the underwriter decides whether the value is adequately supported.

A time adjustment needs proof. If you're reaching for an older comp because the market moved, Fannie B4-1.3-09 is blunt. "Time adjustments, or the lack thereof, must be supported by evidence," and it names the evidence it means, including home price indices, paired sales, statistical analysis and modeling. "The market's up" is not evidence.

That said, if a single comp needs huge adjustments to fit, it isn't really a comp. Toss it and find a closer one. When your three to five adjusted comps cluster in a tight range, that range is your ARV. When they're all over the place, your comp set is bad ... not your subject mysterious.

ARV math (and the number cash buyers actually trust)

Your ARV (After-Repair Value) is what the subject is worth fully renovated to the standard of your adjusted comps ... not its beat-up condition today. Take your set of adjusted comps, find where they cluster, and that's your ARV. Don't cherry-pick the highest sale because you want the deal to work; that's exactly how wholesalers torch their reputation when the buyer's own comps come back lower.

The honest gut-check: would a real cash buyer, looking at these same sold comps, agree with your ARV? If you have to squint, fudge, or ignore the comps that hurt, your number is wrong.

From ARV to MAO (the 70% rule)

Once your ARV is solid, the Maximum Allowable Offer (MAO) tells you the most you can pay and still leave room for everyone. The common starting frame is the 70% rule, and you should know exactly what it is before you lean on it.

MAO = (ARV × 0.70) − Estimated Repairs − Your Assignment Fee

The 70% rule is a rule of thumb, and no primary source sets it. We went looking for one. It is not in Fannie's Selling Guide, it is not in HUD's handbook, and it is not in any appraisal standard we could read. It is a market convention that bakes in the end buyer's profit and holding costs, with your fee carved out so the deal still pencils for them. Operators run the multiplier higher in hot markets and lower in rough ones, which is your clue that it's a dial and not a law. The discipline underneath it is the part that's real. Never make an offer you can't back out of the comps and a real repair estimate. For the full deal walkthrough, see the come-up playbook for your first off-market deal, and for the legal line on assigning, what wholesaling actually is.

Common comping mistakes that kill deals

• Using list prices instead of sold prices. A wish is not a value.
• Reaching for distance or time when you don't have to. A comp that needs four adjustments is worse than one that needs one, whatever the dates say. Reach only when the closer sale doesn't exist, and write down why you reached.
• Letting a family transfer in. Grandma's dollar deed is not a price. Note the difference from a distressed arm's-length sale, which Fannie and FHA both allow as a comp in the right market (rule 6 above).
• Treating a bank's own foreclosure deed as a comp. FHA is explicit that a foreclosure transfer to the lender "is not evidence of the Market Value." The bank taking the house back is paperwork, not a sale to a buyer.
• Crossing an invisible boundary. Same ZIP, different school district or the wrong side of a busy road = different buyers, different prices.
• Picking comps by price instead of by property. FHA states it plainly. Comps "should be selected based on similar locational and physical characteristics, not sales price" (HUD Handbook 4000.1, II.D.4(3)(e)(i)). Choosing comps and adjustments to justify a number you already decided is how you blow your ARV ... and your credibility with the buyer.
• Trusting an automated value (AVM) as gospel. Online estimates are a starting point, not a comp set. They don't see the inside of the house or your specific block.

Frequently asked questions

How many comps do I need?

Fannie's appraisal floor is a minimum of three closed comparables (B4-1.3-08), and FHA requires at least three that settled within 12 months. Three to five solid ones beats ten weak ones. You want a tight cluster of recent, close, similar, arm's-length sales you can defend to a cash buyer. If your comps are scattered all over a price range, the answer isn't "average them" ... it's go find better comps.

Can I just use Zillow's Zestimate?

Use it as a rough starting point, not your ARV. Automated valuations are estimates built from broad data and can miss condition, location nuance, and recent neighborhood shifts. Pull the actual sold comps and run them yourself ... that's the number a buyer or appraiser will check you against.

What if there are no recent sales near my subject?

Widen carefully, and know that the rulebooks expect a written reason either way. Fannie allows older sales when market conditions limit the recent ones, and allows rural comps "a considerable distance away" when the result is still credible and the reach is explained. FHA lets an appraiser in a rural or slow market fall back to three sales settled within 12 months when six-month sales aren't sufficient. Our own order of operations is to stretch the time window before the distance, stay inside the same market area and its boundaries, and keep size and type tight. Whatever you stretch, write down why you stretched it. If you truly can't build a clean comp set, the honest move is to treat the deal as higher-risk ... or pass. A number you can't defend isn't a number.

Sources

• Fannie Mae Selling Guide, B4-1.3-08 Comparable Sales (section dated 06/04/2025) ... the three-closed-comp minimum, the 12-month "should", listings as supporting data only, the neighborhood-boundary rule, straight-line distance with no radius, selection on physical and legal characteristics, and foreclosure and short-sale comps when they're the best available. Applies to loans sold to Fannie Mae.
• Fannie Mae Selling Guide, B4-1.3-09 Adjustments to Comparable Sales (section dated 06/04/2025) ... no net or gross adjustment limits, market-supported adjustments over rules of thumb, and time adjustments supported by evidence. Applies to loans sold to Fannie Mae.
• Freddie Mac Single-Family Seller/Servicer Guide, Section 5605.6, subsections (a) Adjustments and (g) Selection of comparable sales ... no gross or net adjustment percentage limits, and commentary required on any comp more than six months old. Applies to loans sold to Freddie Mac. A new version of 5605.6 becomes mandatory November 2, 2026, so re-check the wording after that date.
• HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook, II.D.4 Valuation and Reporting Protocols, subsections (3) Sales Comparison Approach, (3)(c) Comparable Sale Selection and (3)(e)(i) Comparable Selection in Diverse Real Estate Markets (last revised 8/12/2026) ... the approach is required on every appraisal, the six-month preference with at least three sales settled inside 12 months, selection on characteristics "not sales price", arm's-length comps with the REO and short-sale exception, and a foreclosure transfer to the lender excluded. Applies to FHA-insured mortgages only.
• U.S. county recorder/clerk of deeds and assessor offices ... public records of recorded sales and property characteristics.
• Not sourced, and labeled that way above. The 70% rule, the 3-to-6-month window, the half-mile default, and the 10%-of-square-footage screen are rules of thumb. No primary source sets any of them.

Where Squatters fits

Comping is a skill, and skills are learned, not bought. The free Come-Up Academy on Squatters walks you through running comps and ARV math on real practice deals ... no $2,000 course required. Recon surfaces the public property and market data so you're not hunting across ten county sites, and Bandit, our AI deal agent, helps you pressure-test the numbers before you commit. And the Block is a crew that's actually run these deals, so you learn from people who've done it.

Browse more guides on the blog, or drop in and learn it hands-on.

Squat it. Fund it. Own it.

Ready to run real comps? Read how to decide what to offer on a house next ... it walks the max-offer arithmetic and how to find what a house actually sold for. Free, and no account needed.

Squatters is a software platform and community for real estate investors ... not a law firm, broker-dealer, or investment adviser. Nothing here is legal, tax, or investment advice. Valuation is an estimate, not an appraisal; comping accuracy, deal outcomes, and wholesaling rules vary by state and some activity may require a license. Always do your own diligence, comply with all applicable laws, and consult a local attorney.