That is a very good question and exactly the kind of question to be asking yourself and your Realtor. El Cerrito is a small town. (I live in El Cerrito and specialize in that area too). However you are absolutely right about what comparable homes to use. In our area, appraisers will look at .5 miles first before they extend their search. North of El Cerrito changes drastically in terms of sale prices; schools are different since most likely (depending on where your home is) you will be zoned for Mira Vista which is not a bad school but not an excellent school like Madera so that factor depreciates your home value. Also in general the farther away you are from the Berkeley magnet the lesser the value..
You will be looking at similar homes sold within your immediate neighborhood and sold within the last 3 months and then expand that search. When I do a presentation I give my clients statistics for the city as a whole and then for their immediate neighborhood and it does make a difference.
We had a small home (2bedrooms/1 bath, less than 1000sqft) in the flats and 2 blocks from Albany sell for $645,000 a month ago!!!!!! That would NEVER happen north of El Cerrito. Buyers are all into walkscores and that house ranked high in the chart apparently!
I hope this helps. Don't hesitate to ask more questions, you are on the right path with the right mentality.
CA DRE # 01271748
Marvin Gardens Real Estate