Have you ever looked at a commercial building and thought, “Is this a smart investment?” You’re not alone. For real estate investors, knowing how to find and compare commercial property comps is a key skill. It can help you avoid costly mistakes and spot great deals.
Understanding how to calculate comps for commercial properties is like having a secret tool in your back pocket. It helps you make smart choices, avoid overpaying, and find hidden opportunities in the market.
In this simple guide, you’ll learn the basics of using commercial real estate comps to make better decisions. Whether you're new to investing or looking to sharpen your skills, this will help you feel more confident.
Before we jump into how to use them, let’s start with what they are. Commercial property comps—short for “comparables”—are properties that recently sold and are similar to the one you're looking at. These comps help you figure out what a property is really worth.
Think of them like pricing a used car. You wouldn’t pay top dollar without comparing it to similar cars, right? The same idea applies to commercial real estate. By looking at similar properties—same location, size, and condition—you can tell if the price makes sense.
Commercial real estate comps are especially helpful when you're deciding how much to offer or figuring out if a deal is too good to be true. When used correctly, they help you stay grounded in the real numbers, not just guesses.
When you're thinking about buying a commercial property, you need to know if the price is fair. That’s where commercial real estate comps come in. They help you compare similar properties and see if the one you’re looking at is priced too high—or maybe even a great deal.
Comps give you real numbers to back up your decisions. You can use them to:
The more accurate your comps, the more confident you can be. They take the guesswork out of buying and help you build a solid investment plan.
To figure out the right value of a property, you need good data. Accurate comps start with reliable information—and knowing where to find that information is the first step.
There are two simple and trusted ways to gather property data:
By using these two sources, you can build a strong list of commercial property comps to compare. Make sure to double-check the details. Even small errors in the numbers can throw off your whole analysis.
Once you’ve found your comps, the next step is knowing what to compare. Not all properties are the same, so focusing on the right details is key to getting an accurate value.
Here are the most important commercial real estate data points to collect:
These details give you a clear picture of whether a property is priced fairly. Keep your notes organized, and always compare apples to apples.
Finding comps is a good start, but understanding the market around those comps helps you make better choices. Let’s break down how to look at the bigger picture.
Real estate prices go up and down based on many factors—interest rates, job growth, new businesses, and even weather events. To know if a comp is still accurate, look at what’s happening in the market right now. Has demand gone up? Are more properties sitting empty?
Look back a few years to see how prices have changed. If prices have gone up year after year, that might continue, but don’t count on it without checking current facts too. Use public records to look at older sales and compare them to recent ones.
Things like new roads, zoning changes, or big construction projects can raise or lower property values. Keep an eye on city plans that could affect the neighborhood where your comps are located.
Not all comps are equal. Even if two properties look similar, you might still need to make adjustments so the comparison is fair.
Think about these details when comparing properties:
Use these factors to mentally add or subtract value when comparing comps to your property.
Sometimes, the market changes between when a comp sold and when you're looking to buy. If a comp sold during a market high or low, adjust your expectations. Inflation, interest rate hikes, or a hot job market can shift prices fast.
Even experienced investors make mistakes when using comps. Here are a few common errors and how you can stay clear of them.
If your data is wrong, your decisions will be too. Always check that sale prices and property details are up to date. Don’t rely on one source. Use both DealMachine and public records to confirm the facts.
Ignoring small differences between properties can lead to big mistakes. Always think about condition, location, and timing when comparing.
Comps are important, but they’re not everything. Look at the market as a whole, including future growth, job trends, and development in the area.
Check out the video below on some of the biggest differences of investing in residential vs commercial real estate.
Learning how to use commercial property comps doesn’t have to be hard. With the right data, a few smart tools like DealMachine, and a clear plan, you can feel confident when looking at any commercial property deal.
Start by gathering good information, compare the right details, and look at the bigger market picture. Make small adjustments where needed, and always double-check your data.
The more you practice, the easier it gets—and the better your investment decisions will be.
What are commercial property comps used for?
They help you find the fair market value of a potential commercial real estate investment by comparing it to similar properties that recently sold. This makes it easier to decide if you're getting a good deal or overpaying.
How do I find commercial real estate comparables for free?
Start with public records from your county or city. They often list sales prices, tax data, and ownership info. You can also use apps like DealMachine to look up property details while you're researching an area.
What should I compare when looking at commercial comps?
Check the building size, lot size, location, sale price, potential use cases, and net operating income (NOI). You should also consider the property's condition and any recent upgrades or changes.
Why do I need to adjust comps?
No two properties are exactly the same. You may need to adjust your comps to reflect differences in condition, square footage, age, or even changes in the local market since the sale.
How far back should I look for comps?
Try to use comps that sold within the past 6 to 12 months. Older sales may not reflect current market conditions, especially if prices have shifted recently.
Can I use residential comps to value commercial properties?
No. Commercial and residential properties are valued differently. Always use other commercial properties when comparing values to keep your analysis accurate.
What tools help with commercial comp analysis?
Tools like DealMachine can help you gather property data quickly. Public records are also helpful and free to access in most counties.
How accurate are commercial property comps?
They’re only as good as the data you use. If you double-check details and adjust properly, comps can give you a reliable estimate of a property’s true market value.