Recently sold properties of similar age, style, condition, and location. The closer the similarities, the better the comp. Comps provide the basis for a Real Estate Broker’s analysis of value and are the basis of a Comparative Market Analysis.
Of the characteristics of a comp, by far the most important is location (which, along with location and location, are the three most important factors in determining the market value of real estate). So setting a search geographical search parameter is essential. As a general rule of thumb, here in Seattle a good comp is within a half mile. But neighborhoods come in all shapes, and some boundaries are “harder” than others (think freeway, or railroad tracks). So pick the area for your search accordingly.
Sometimes there is no good comp. In that instance, you have to relax your criteria a little. You may need to look further afield, into an adjacent neighborhood. You may need to look at much newer houses. Ultimately, there is no “right” answer. Use the data you have, and trust your own analysis.