Concept

Range of Comps

What it is

The range of comps is where all flippers are trying to put their houses on the market. It’s what your real estate agent is finding when you ask them for a comparative market analysis. They take your three-bed two-bath 1,500 square foot house and they find all the other houses that are just like it — comparable to it — and they figure out that once those were fixed up, what did they sell for. You can figure your house will sell for something like that.

It’s the top cluster on the scale of livability. Bombed out houses are on the left, barely bankable in the middle, range of comps on the right. That’s the line you’re pushing toward every time you flip.

The range isn’t one number — it’s a band. There’s a floor (I call that the baseline) and a ceiling. Everything inside is the sellable range. Working inside it is the whole game.

Why it matters

The range of comps is a ceiling on your ambition. You can move a house up through the range of comps without spending one-to-one money to do it. That’s where the psychological hacks and the big three come in. But where you really get in trouble is when you have a house that’s already in the range of comps and you try to push it further. That money doesn’t come back.

I have first-hand evidence of this from Colorado. I had a house where I thought I was going to sell it for close to $800,000. Had a property with an ARV I thought would hit $795K. The real ceiling in that neighborhood was $667,000. I spent way too much on a second-story addition, custom concrete countertops, a two-story indoor waterfall. Meanwhile, this guy named Glenn bought the house across the street and did a plain cosmetic flip — new cabinets, new countertops, made the bathrooms nicer, left the carpet in the bedrooms. He sold for right around the comp range and made close to six figures in about 90 days. I was still laboring across the street losing over six figures on my monstrosity.

I served up gourmet food in a truck stop diner. The range of comps told me what the street could absorb. I ignored it.

The for-sale price is not the range of comps. If a house hasn’t sold yet, it’s not a real comparison — an appraiser will not use it. The for-sale price is always going to be higher than what it actually sold for. Your range is built on closed sales only.

How it shows up

Pull every sold, fully renovated comp within a tight radius and tight time window. Filter for similar size, similar age, similar bed/bath count. Cluster them by price. The tight cluster is your range. Outliers tell you nothing. The cluster is where real buyers live.

The range also tells you your finish level. If every comp has granite countertops and fresh paint, well, you need to do granite countertops and fresh paint. If they don’t have crown molding, don’t do crown molding. Match the standard but don’t exceed it — except on the big three where you push just slightly above.

Your ARV is the range of comps. That’s what you should sell that house for. Pro flippers focus on right in the center or even the low end of the range — that’s price centering. You’re not hoping the market gives you something new. You know what it will give you because it already gave that to other people.

scale of livability, baseline, comps, barely bankable, big three, price centering, arv