Financing

What hard money lenders look for when evaluating comparable sales

When you approach a hard money lender, he or she will scrutinize your comparable sales (comps) heavily to assess the property's after-repair value (ARV). Understanding what hard money lenders look for in comps helps you prepare your deal for approval.

October 13, 2026 · 3 min read

Why comps are critical to hard money lenders

Hard money lenders primarily lend based on the asset, not solely your credit. This means the property's value, especially its projected after-repair value (ARV), is paramount to them. Comps are the foundation for establishing that ARV.

The lender uses comps to determine how much he or she is willing to lend against the property, usually as a percentage of the ARV. Your ability to justify that ARV with solid comparables directly impacts your loan amount and terms.

The "recency" factor in comparable sales

Hard money lenders prefer the most recent sales data available. Ideally, they want to see comps that have sold within the last three to six months. Older sales are less indicative of current market value and may be discounted or rejected.

In a rapidly changing market, even six-month-old comps might be viewed with skepticism. Always prioritize comps that closed as recently as possible to strengthen your case.

Proximity and similarity: the closest comparables

Lenders want to see comps within a very tight radius of your subject property, typically within a half-mile to a mile. The closer the comp, the more relevant it is considered.

Beyond distance, the comps must be similar in terms of property type (single-family, condo), size (square footage), bedroom/bathroom count, and age. An identical property next door is the ideal, though rarely found.

Condition of the comps versus your subject property

The best comparables are those that have recently been renovated to a similar standard as your projected after-repair condition. Lenders look for true "apples to apples" comparisons.

If your comps are in significantly better or worse condition than your projected ARV, the lender will make adjustments. You need to be able to justify why your property, after rehab, will achieve a similar sale price to your chosen comps.

Adjusting for differences: square footage, beds/baths, features

No two properties are exactly alike, so lenders expect adjustments for differences. You should be prepared to explain how you adjusted your comps for variations in square footage, number of bedrooms or bathrooms, lot size, and key features like a garage or pool.

These adjustments should be based on local market value for those features. A hard money lender's internal appraiser will make his or her own adjustments, but having your estimates prepared shows you have done your due diligence.

Sale type matters: arms-length vs. distressed sales

Hard money lenders generally prefer comps that were traditional, arms-length sales, meaning they sold on the open market between unrelated parties. These sales reflect fair market value.

While you might find a good deal on a distressed property, using foreclosures or short sales as direct comparables for your ARV can be problematic. Lenders know these often sell below market value and may not reflect what your renovated property will fetch.

Preparing your comp package for a lender

Assemble a clear, concise package of your best comparables. Include photos, property details, and a brief explanation for why each comp is relevant and how you adjusted for any differences.

The easier you make it for the lender to understand your ARV justification, the smoother the underwriting process will be. Presenting organized, well-supported data reflects professionalism and can help you secure better terms.

Questions people ask

Can I use a comp that's a foreclosure?

You can include it, but hard money lenders will typically give less weight to foreclosures or short sales because they often sell below market value. Focus on traditional sales for your primary comps.

What if there aren't many recent sales in the area?

This can be a challenge. You might need to expand your search radius slightly or look for comps that are a bit older, but be prepared to justify why those comps are still relevant to the lender.

Do lenders only look at sold properties, or do they consider active listings too?

Lenders primarily focus on *sold* properties because those represent actual market transactions. Active listings or properties under contract are less reliable indicators of value, as their final sale price is not yet known.