Comparable sales are recently sold properties that provide evidence for what buyers may pay for the home being appraised. A useful comparable shares important features such as location, property type, land, accommodation and condition. The agent then explains the differences rather than copying the sale price. In Victoria, comparable evidence is central to a reasonable estimated selling price when an agent is appointed to sell residential property.
What makes a sale genuinely comparable
A comparable sale is a property transaction that helps explain the likely market position of another property. It is not simply a sale in the same postcode. Buyers compare homes according to the features that matter to them, so the evidence should reflect the subject property’s type, land, accommodation, condition, location and likely audience.
For example, two three bedroom homes may not compete directly if one is a detached house on its own title and the other is a unit with shared land. Even two detached houses can differ materially because of street position, renovation quality, orientation, parking or the usability of the floor plan. The agent’s task is to find the best available evidence and explain its limitations.
Victorian comparability requirements
When an agent prepares the estimated selling price for a residential property in Victoria, the estimate must be reasonable and take account of the three properties the agent considers most comparable. Current Consumer Affairs Victoria guidance considers standard, condition, age, renovation or building status, location, school zoning, neighbourhood features and similar properties in the same estate or complex, as well as the applicable distance and recency settings.
Those requirements establish a minimum discipline for the formal estimated selling price. They do not mean every sale inside the permitted area and period is equally useful. The agent still needs to identify the properties that best resemble the home and explain why. If suitable evidence is limited, that uncertainty should be made clear rather than hidden behind a precise looking figure.
Why recency matters
A sale records the market at the time the buyer and seller agreed. Conditions may have changed since then. Available stock, finance settings, buyer confidence and seasonal patterns can alter competition. More recent evidence is generally easier to relate to the present market, but a slightly older sale may still be valuable if it is far more similar to the subject property.
The agent should not adjust an old price mechanically using a broad suburb percentage and call the result precise. Broad data can provide context, while the appraisal still needs property level judgement. Ask how market movement between the comparable sale and the appraisal has been considered.
Location within a suburb can change the comparison
Suburb medians combine many different properties and are not valuations of an individual home. Within one suburb, buyers may respond differently to beachside and inland positions, school access, station proximity, main road exposure, views, noise, flood or planning considerations and the character of a particular street. Boundaries can also bring very different housing stock into the same data set.
A nearby sale may therefore require a significant adjustment, while a sale a little farther away may be more useful because the buyer experience is similar. The agent should explain the local reasoning without relying on vague claims that one pocket is always worth a fixed premium.
Adjusting for the property itself
Once the closest sales are selected, the agent compares their features with the subject property. Land size matters, but shape, access, orientation and development constraints can matter too. Building size is relevant alongside layout and condition. A larger home with wasted space may not appeal more strongly than a smaller home with a practical plan.
Renovation quality should be assessed carefully. Buyers may value a coherent, well maintained renovation, but they do not necessarily reimburse every dollar an owner spent. Conversely, an unrenovated home may appeal to a buyer seeking land or a project. The appraisal should distinguish cost from market contribution.
- Land size, shape, orientation and access
- Bedrooms, bathrooms, living zones and functional layout
- Renovation quality, maintenance and obvious defects
- Parking, privacy, light, outlook and outdoor areas
- Title, owners corporation or planning matters that buyers may consider
What happens when there are few good comparables
Distinctive homes, tightly held streets and changing neighbourhoods may have limited direct evidence. In that situation, the agent can widen the analysis carefully. One sale may help with land value, another with accommodation and another with renovation quality. Active listings and withdrawn campaigns can add context, although an asking price is not proof of what buyers will pay.
The conclusion should reflect the evidence gap. A broad range with a clear explanation may be more honest than a narrow estimate built on weak comparisons. If the value is needed for a formal purpose, an independent valuer should be instructed to address that purpose.
Questions sellers should ask
Ask which sales carry the most weight, not merely how many appear in the report. Ask what makes each property similar, what makes it different and whether any recent sale points to a lower conclusion. A balanced appraisal should address contrary evidence as well as the strongest result in the neighbourhood.
Also ask what current properties buyers will inspect instead, whether the comparable prices were confirmed and what new sale would cause the estimate to be reviewed. These questions help an owner judge the quality of the reasoning and reduce the risk of selecting an agent on the highest unsupported number.
Questions sellers ask
What makes a sale genuinely comparable?
It should be similar in the features that materially influence buyer choice, including property type, condition, land, accommodation and location. The most useful sale is not always the nearest or the highest; the agent must explain similarities and differences.
How recent and close must Victorian comparable sales be?
For a Melbourne metropolitan residential property, the prescribed comparison generally looks for similar-condition sales within two kilometres and the previous six months. Different distance and time settings apply outside metropolitan Melbourne. The agent must still assess which qualifying sales are genuinely most comparable.
What if there are fewer than three comparable sales?
An agent is not required to take three sales into account if they reasonably believe fewer than three qualifying comparables exist. The estimated selling price must still be reasonable, and a seller should ask what other evidence and assumptions support it.
Should I rely on a suburb median instead?
No. A median summarises a group of sales and does not adjust for your property's land, condition, layout or exact position. It can provide context, but property-level comparable evidence is more useful for an appraisal.
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