Chapter 9
Comparable-Sales Analysis

Nature of the Approach

Imperfections of real estate markets

Necessity for use of appraisers

Data collection and Verification

Sources

Reliability

Addition and subtraction of value differences

Elements of Comparison

Transaction differences

Financing terms

Conditions of sale

Market conditions

Property differences

Location

Physical characteristics

Economic characteristics (Income properties)

Obtaining Comparable Properties

Meaning of comparability

Transaction should have occurred within preceding one or two years

Minimum number of transactions required

Units of comparison

Financing terms and conditions of sale (Normal sale price)

Market conditions (Adjusted normal sale price)

Location, physical characteristics, and economic (Final adjusted sale price)

Comparable Sales Example

Subj.: 3 bdrm, 2 bath, 1-car gar., 2100 s.f.

Sale 1: Sales Price = \$98,000
3 bedroom, two bath, 1-car garage, 2000 s.f.

Sale 2: Sales Price = \$108,000
3 bedroom, two bath, 2-car garage, 2200 s.f.

Sale 3: Sales Price = \$101,000
3 bedroom, one bath, 1-car garage, 2200 s.f.

Sale 4: Sales Price = \$93,000
3 bedroom, one bath, 1-car garage, 2000 s.f.

Adjustment for Bathrooms: Compare Sale 1 and Sale 4; \$5,000 difference for bath.

Adjustment for Size: Compare Sale 1 and Sale 3; If Sale three had 2 baths, it would have sold for \$106,000, so the extra 200 s.f. cost an extra \$8,000 or \$40 per s.f.

Adjustment for extra garage stall: Compare Sale 1 and Sale 2; If sale 2 had 2000 s.f. it would have sold for \$100,000, so the extra garage cost \$2,000.

Sale1 Sale2 Sale3 Sale4

Price \$98,000 \$108,000 \$101,000 \$93,000

Garages \$0 -\$2,000 \$0 \$0

Baths \$0 \$0 +\$5,000 +\$5,000

Size +\$4,000         -\$4,000 -\$4,000 +\$4,000