No two homes are the same, yet every appraisal has to land on one number. So how appraisers compare homes that are not alike is less mystery than method. Appraisers call the method the sales comparison approach. It runs on two moves: picking the right comparable sales, then adjusting for the differences that remain. Understand those two moves and most “why did it appraise there?” questions answer themselves.
- How appraisers choose comps, and why the nearest sale can lose out.
- How dollar adjustments work, including which property gets adjusted.
- What happens when a home has no close matches at all.
Where Comps Come From
A comp is a recent sale a buyer would have weighed against the subject home. Three filters do most of the sorting. Recency comes first, because last year’s market is not this year’s market. Location comes next, and it means market area, not just distance. Then comes similarity: style, size, age, condition, and lot.
Chicago makes this interesting. A brick bungalow, a frame two-flat, and a new infill build can share one block. Still, they belong to three different buyer pools. So an appraiser may skip the sale next door. Instead, the right comp may sit three streets away, in front of the same buyer pool. That choice is not cherry-picking. It is the whole point of the exercise.
Sources matter here too. Appraisers pull closed sales from the MLS and public records, then verify the details that photos hide. A sale with seller credits, or an off-market deal between relatives, can look like a comp and behave like a trap. For instance, a $400,000 sale with $15,000 in concessions did not really trade at $400,000. So verification keeps those numbers from skewing the comparison.
How Appraisers Compare Homes That Differ
Once the comps are chosen, differences remain. Adjustments translate those differences into dollars. Here is the part most people get backwards: the adjustment lands on the comparable, not on the subject. The question is always the same. What would this comp have sold for if it matched the subject?
A quick illustration shows the direction. Say a comp sold for $420,000 with a renovated kitchen, and the subject’s kitchen is original. The comp’s buyer paid something for that kitchen. So the appraiser adjusts the comp’s price downward to strip that advantage out. If the subject instead has the better feature, the comp adjusts upward. Run that logic across every meaningful difference and each comp produces an indicated value for the subject. The appraiser then weighs those indications, leaning hardest on the comps that needed the least adjusting.
What Moves the Number Most
Not every difference earns an adjustment. Appraisers adjust for what the market pays for, and the market is not sentimental. Location factors like school boundaries, transit, and busy streets tend to matter. So do livable square footage, bed and bath count, condition, and functional layout. Meanwhile, the $60,000 kitchen does not automatically return $60,000. We cover why in our guide to which property updates add value. Cost and value are different numbers, and adjustments track the second one.
Support for each adjustment matters too. Appraisers extract adjustment amounts from the market itself, by comparing sales that differ in just one feature. That discipline separates an appraisal from an estimate. Also, it is the standard that professional bodies like the Appraisal Institute train and credential for.
When There Is No Good Comp
Some homes break the easy version of the method. A rehabbed loft in a neighborhood of frame houses. The one oversized lot on the block. A home twice the size of anything nearby. For these, the appraiser widens the search in geography and in time. Then the goal is bracketing: at least one comp superior, at least one inferior. So the value lands inside a defensible range instead of hanging off one data point.
This is also where automated estimates struggle most, because an algorithm cannot tell which unlike homes are still comparable. We covered that gap in detail in our Zestimate versus appraisal breakdown. The harder the property is to match, the more the value depends on judgment. That judgment is exactly what you are hiring.
Comparison Is a Method, Not a Guess
So the answer to the question in the title comes down to this. Appraisers compare unlike homes in three steps. First, they select the sales a real buyer would have considered. Then they adjust those sales for measurable differences. Finally, they weigh the results by how much adjusting each comp needed. Every step leaves a paper trail. That is why a credible appraiser can explain the report line by line. So a number nobody can explain should make you ask better questions. For residential appraisals across Chicagoland, that paper trail is the product.
Two homes, same block, $40,000 apart. Why?
Get a valuation built on the right comparables, with every adjustment explained.
Frequently Asked Questions
How do appraisers pick which homes to use as comps?
By asking which recent sales a buyer would have treated as real alternatives to the subject home. Recency, market area, and similarity in style, size, age, and condition drive the choice. The appraiser skips the nearest sale when it belongs to a different buyer pool.
What is an appraisal adjustment?
A dollar amount that accounts for one difference between a comp and the subject property. Condition, square footage, and lot size are typical examples. Appraisers extract adjustments from market evidence rather than a chart.
Does the appraiser adjust my home or the comparable?
The comparable. Each comp’s sale price gets adjusted to answer one question. What would it have sold for if it matched your home? If the comp has the better feature, its price adjusts down. If your home has the better feature, the comp adjusts up.
What happens if no similar homes have sold nearby?
The appraiser widens the search area and the time window. Then the subject gets bracketed with at least one superior and one inferior comp, so the value sits inside a supported range. Unusual properties take more work, not less accuracy.
Will a renovated kitchen raise my appraisal by what it cost?
Usually not dollar for dollar. Adjustments reflect what buyers in your market actually pay for the feature. That can be more or less than its cost. Cost and market value are related but different numbers.
Appraisals Grounded in the Right Comparables
PahRoo Appraisal & Consultancy appraises residential and commercial property across Chicagoland, with offices serving Dallas, Philadelphia, Phoenix, and Naples. An appraiser holding both MAI and SRA designations leads the firm. Every report documents the comps chosen, the adjustments made, and the evidence behind them.