CMA Adjustments Explained: How to Adjust Comps Without Guessing
Two agents, same four comps, $40,000 apart. The difference is always in the adjustments.
Short answer
Adjustments modify a comparable's sale price to answer one question: what would this comp have sold for if it were identical to the subject property? The rule of direction is fixed — if the comp is better than the subject, subtract; if the comp is worse, add. You adjust the comp, never the subject.
The direction rule, because everyone gets it backwards
You are not adjusting your property up or down. You are simulating what the comp would have fetched as a clone of your property.
- Comp has a third bathroom, subject does not → the comp had an advantage → subtract from the comp's price.
- Comp has no garage, subject has a two-car → the comp had a disadvantage → add to the comp's price.
Say it out loud once as "what would this house have sold for without the pool" and the direction stops being confusing.
Where adjustment values come from
Paired sales analysis (the defensible method)
Find two sales that are as close to identical as possible except for the one feature you are pricing. The difference in sale price is the market's answer.
Example: in the same subdivision, same builder, same floor plan, two homes sold within six weeks — one with a finished basement at $512,000, one without at $478,000. Your finished basement adjustment in that market is roughly $34,000. Not a rule of thumb. Evidence.
You will rarely find perfect pairs. Three imperfect pairs pointing at the same range is still far better than a number you made up.
Cost minus depreciation
For features with a known build cost — an ADU, a new roof, solar — start with replacement cost and depreciate. Critically, market value is almost never equal to cost. A $75,000 kitchen renovation typically returns well under its cost at resale. Adjust to what the market pays, not what the seller spent.
Market extraction / regression
Run price per square foot across a large set of local sales and isolate the coefficient for a variable. Powerful in data-rich markets, unstable in thin ones.
Local convention
The weakest source, and the most commonly used. "Everyone here uses $10,000 for a bathroom." It might be right. You cannot defend it if challenged.
Typical adjustment categories
| Category | Typical basis | Notes |
|---|---|---|
| Gross living area | $ per sq ft of difference, usually 40–70% of the market's average PPSF | Never use full PPSF — that double-counts land and fixed costs |
| Bedroom count | Market-extracted, often modest if sq ft already adjusted | Do not adjust for both sq ft and beds at full value |
| Bathrooms | Paired sales; full vs. half matters | Third bath often worth more than a fourth |
| Garage | Per bay, paired sales | Climate and market dependent; large in the Midwest, small in some Sun Belt markets |
| Lot size | $ per acre or per sq ft above a base lot | Non-linear — the first quarter acre is worth far more than the fourth |
| Condition / updates | Cost minus depreciation, market-adjusted | The largest and most-skipped adjustment |
| Age / effective age | Depreciation curve | Effective age beats chronological age after a renovation |
| Pool | Paired sales; can be negative in some markets | In cold climates a pool is a liability adjustment |
| Location | Paired sales across the boundary | Backing a highway, school zone, waterfront, view |
| Seller concessions | Dollar for dollar, downward | A $500k sale with $15k credits is a $485k sale |
| Market conditions | % per month of price movement | Required whenever a comp is more than ~90 days old in a moving market |
A worked example
Subject: 2,000 sq ft, 3 bed / 2 bath, 2-car garage, no pool, updated kitchen, sold-comp market average PPSF $250.
| Adjustment | Comp A |
|---|---|
| Sale price | $525,000 |
| Sold 5 months ago, market +0.4%/mo | +$10,500 |
| 2,200 sq ft (200 more) @ $110/sq ft | −$22,000 |
| 3 bath vs. 2 | −$12,000 |
| 1-car garage vs. 2 | +$8,000 |
| Pool | −$18,000 |
| Original kitchen vs. updated | +$20,000 |
| $8,000 seller concession | −$8,000 |
| Adjusted value | $503,500 |
Note the size adjustment: $110/sq ft, not $250. The full price per square foot includes land, site improvements, and fixed structure cost that do not scale with an extra 200 square feet. Using full PPSF is the single most common adjustment error, and it inflates every large-comp adjustment you make.
Gross vs. net adjustment — the sanity check
- Net adjustment = the sum with signs (+$10,500 − $22,000 − $12,000 …). In the example: −$21,500, or −4.1% of sale price.
- Gross adjustment = the sum of absolute values: $98,500, or 18.8%.
Appraisal practice commonly treats net adjustments over ~15% and gross over ~25% as a signal the comp is weak. Those are guidelines, not laws — but if you are moving a comp by a quarter of its sale price to make it fit, it is not a comp. Find a better one.
Six errors that break a comp set
- Full PPSF for size adjustments. Covered above. Use 40–70% of market PPSF.
- Double-counting. Adjusting for square footage and bedroom count and bathroom count at full value prices the same space three times.
- Skipping condition because it is subjective. A missing adjustment is a $40,000 error asserted as zero.
- Ignoring concessions. Recorded price is not net price.
- No market-conditions adjustment. If prices moved 5% since your comp closed, that comp is 5% wrong before you touch anything else.
- Adjusting toward the answer. If every adjustment happens to push toward the seller's number, you are reverse-engineering, and an appraiser will find it.
Reconciling to a range
You now have three to six adjusted values. Do not average them blindly. Weight by comp quality — the comp with the smallest gross adjustment and the closest proximity should carry the most weight. Then publish a band:
- Low — the price at which this sells quickly with no negotiation.
- Likely — the weighted center of your adjusted comps.
- High — the reach price, achievable with the right buyer and a longer timeline.
A range invites a strategy conversation. A single number invites an argument. More on that framing in building a CMA that wins listings.
The bottom line
Adjustments are where a comp report stops being a list of houses and becomes a valuation. They are also the part of the process a seller cannot check and an appraiser absolutely can. Do them from evidence, document the reasoning, and keep the gross adjustment honest — that is the whole discipline.
Frequently asked questions
Do you adjust the comp or the subject property?
Always the comp. You are estimating what each comparable would have sold for if it matched the subject property. The subject's price is the unknown you are solving for.
Should I add or subtract if the comp is better?
Subtract. If the comparable is superior to the subject, its sale price overstates the subject's value, so you reduce it. If the comparable is inferior, you add.
What dollar amount should I use per square foot?
Not the market's full price per square foot. Roughly 40% to 70% of it, because full PPSF includes land and fixed structure costs that don't scale with incremental space. The defensible method is paired sales analysis in your own market.
What is paired sales analysis?
Comparing two sales that are nearly identical except for one feature, and treating the price difference as that feature's market value. It's the most defensible way to derive an adjustment amount.
What is an acceptable gross adjustment?
Appraisal convention commonly flags net adjustments above about 15% and gross adjustments above about 25% of sale price as a sign the comparable is weak. If you're exceeding those, look for a better comp.
Do I need to adjust for seller concessions?
Yes, dollar for dollar and downward. A recorded $500,000 sale with $15,000 in seller-paid closing costs reflects a true market price closer to $485,000.