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25 Cards in this Set

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sales comparison
market comparison or market data approach
sales comparison approach
best method for single family home - use actual data from market transaction
principle of substitution
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.
Real Estate Market
a distinct group of buyers and sellers whose actions are influenced in similar ways by forces of supply and demand
Comparable sale
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
Steps for sales Comp Approach
1) DATA COLLECTION
relevant data sales price, listing price, contract
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!
Steps for sales Comp Approach
3) Select Units of Comparison
square foot to sq ft...
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
Steps for sales Comp Approach
5) Reconciliation of comp value indicators
Reconciliation is NOT a simple averaging on the value indicators
Elements of Comparison
is any element of a RE transaction that may effect the sale price
Conditions of Sale
Refer to the motivation of the buyer and seller in a particular transaction.
Market Conditions
the closer the sale date of the comp is to the effective date of the app the more reliable it is.
Location
the comp s/b in the same neighborhood as the subject
Leasehold Interest
Includes the right to use the property under a lease
Leased Fee
the interest of an owner of a leased property
Physical Characteristics
size & shape of lot, age & condition of improvements, # of rooms.
Adjustment Techniques
May be quantitative ($, %) or qualitative (superior, inferior,same).
Quantitative
Paired Analysis
Qualatative
Relative Comparitable Analysis
Paired Data Analysis
- matched pairs or paired data
Technique of measuring the effect on value that is caused be difference in a single element of comparison
Relative Comparison Analysis
adjustments not expressed in $ or % - but superior, inferior or same - calculated as a % adjustment
Reconciliation
comps that require less adjustments are usually more reliable
Gross Adjustment
total amount of the adjustments w/o regard to whether adj is pos or neg
Net Adjustment
Sum of the + or - adjustments