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25 Cards in this Set
- Front
- Back
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sales comparison
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market comparison or market data approach
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sales comparison approach
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best method for single family home - use actual data from market transaction
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principle of substitution
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a buyer would not pay more than it will cost to acquire an equal property within a resonable amount of time. note that no two peices of property are exactly the same.
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Real Estate Market
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a distinct group of buyers and sellers whose actions are influenced in similar ways by forces of supply and demand
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Comparable sale
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must compete with the subject property. must be in the same market as the subject. iIf comparable sale are indequate or totally lacking - the S C A cannot be applied
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Steps for sales Comp Approach
1) DATA COLLECTION |
relevant data sales price, listing price, contract
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Steps for sales Comp Approach
2) VERIFICATION OF DATA |
interviewing a party to the transaction is considered the most reliable way to verify transaction data.
Physical inspection is the most reliable way! |
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Steps for sales Comp Approach
3) Select Units of Comparison |
square foot to sq ft...
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Steps for sales Comp Approach
4) Analysis & Adjustment of Comp Prices |
Rules for Comp
A) avoid forced sales B) Avoid comps more than 20% in size C) If gross adjustments are greater than 25% of sales price, it is not a good comp |
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Steps for sales Comp Approach
5) Reconciliation of comp value indicators |
Reconciliation is NOT a simple averaging on the value indicators
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Elements of Comparison
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is any element of a RE transaction that may effect the sale price
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Conditions of Sale
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Refer to the motivation of the buyer and seller in a particular transaction.
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Market Conditions
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the closer the sale date of the comp is to the effective date of the app the more reliable it is.
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Location
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the comp s/b in the same neighborhood as the subject
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Leasehold Interest
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Includes the right to use the property under a lease
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Leased Fee
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the interest of an owner of a leased property
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Physical Characteristics
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size & shape of lot, age & condition of improvements, # of rooms.
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Adjustment Techniques
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May be quantitative ($, %) or qualitative (superior, inferior,same).
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Quantitative
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Paired Analysis
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Qualatative
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Relative Comparitable Analysis
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Paired Data Analysis
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- matched pairs or paired data
Technique of measuring the effect on value that is caused be difference in a single element of comparison |
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Relative Comparison Analysis
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adjustments not expressed in $ or % - but superior, inferior or same - calculated as a % adjustment
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Reconciliation
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comps that require less adjustments are usually more reliable
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Gross Adjustment
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total amount of the adjustments w/o regard to whether adj is pos or neg
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Net Adjustment
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Sum of the + or - adjustments
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