Nature of the Approach
of real estate markets
for use of appraisers
Data Collection and Verification
and subtraction of value differences
of comparables' prices
Elements of Comparison
u Per seat
u Per front
u Per square
u Per cubic
u Per square
foot of gross leasable area
Measuring Rentable Space
u BOMA method
rentable area includes inside dimensions except elevators, stairwells, and
utility shafts; restrooms, janitor closets, and utility rooms
u When entire
floor is occupied by a tenant, then the rentable area equals the usable area.
u R/U ratio
used to determine rentable space in an office which occupies less than the
u New York
method uses outside dimensions to compute the rentable area.
characteristics (Income properties)
Obtaining Comparable Properties
u Meaning of
should have occurred within preceding two years
number of transactions required
Methods of Adjustment
u Units of
Sequence of Adjustments
terms and conditions of sale (Normal sale price)
conditions (Adjusted normal sale price)
physical characteristics, and economic (Final adjusted sale price)
adjustments--any sequence o.k.
Presentation of Adjustment Process (See Exhibit 9.4, pp. 143-145)
Comparable Sales Example
interior lot, 2 curb cuts, 21000 s.f.
1: Sales Price = $98,000
corner lot, 1 curb cut, 20000 s.f.
u Sale 2:
Sales Price = $108,000
corner lot, 2 curb cuts, 22000 s.f.
3: Sales Price = $101,000
interior lot, 1curb cut, 22000 s.f.
4: Sales Price = $93,000
interior lot, 1-curb cut, 20000 s.f.
Sales Comparison Adjustments
for interior/corner lot: Compare Sale 1
and Sale 4; $5,000 difference for
for Size: Compare Sale 1 and Sale
3; If Sale 3 had a corner lot, it would
have sold for $106,000, so the extra 2000 s.f. cost an extra $8,000 or $4 per
for extra curb cut: Compare Sale 1 and
Sale 2; If sale 2 had 20000 s.f. it
would have sold for $100,000, so the extra curb cut is worth $2,000.
Sales Comparison Adjustment Grid
u Sale1 Sale2 Sale3 Sale4
u Price $98,000
$108,000 $101,000 $93,000
cut $0 -$2,000
u Location $0 $0 +$5,000
u Size +$4,000
-$4,000 -$4,000 +$4,000
$102,000 $102,000 $102,000
Sales Price is then $102,000
The Value Conclusion
Applicability of Comparable Sales Analysis
u General use
of subject and comparable must be same
rents should be similar
expenses should be similar
unimproved properties, the zoning should be similar.