The Student Handbook to T HE A PPRAISAL OF R EAL E STATE 1 Chapter 14 Comparative Analysis

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 14 2 Quantitative Adjustments Data analysis techniques  Paired data analysis – Sales with and without a feature Statistical analysis – Many sales with and without a feature Graphic analysis – Many sales presented in a graphic presentation

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 14 3 Agricultural Land Sales

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 14 4 Price per Acre

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 14 5 Quantitative Adjustments, continued Cost analysis – Depreciated cost can be used to support adjustment rates in the sales comparison approach.

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 14 6 Quantitative Adjustments, continued Capitalization of income differences  Gross rent multipliers  Direct capitalization of a single year’s income

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 14 7 Qualitative Analysis Trend analysis Relative comparative analysis  Narrative discussion of issues, usually just listing the data  Discussion of what is inferior and what is superior Ranking analysis

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 14 8 Ranking Analysis

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 14 9 Elements of Comparison Transactional adjustments  Real property rights conveyed Life estates Leased fee, leasehold, subleasehold Mineral rights  Financing terms Low interest rate mortgage assumptions Conditional sales contracts Purchase-money mortgages Seller-paid concessions

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter Sequence of Adjustments

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter Elements of Comparison, continued  Conditions of sale Motivated sellers Motivated buyers Related parties Sales of adjacent properties Sales with only one buyer or only one seller  Expenditures made immediately after purchase The sale price of the property plus the new roof or new HVAC system The sale price plus the cost of demolition of the building

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter Elements of Comparison, continued  Market conditions adjustments Compensate for changes in the market from the date of sale to the effective date of appraisal Make the value opinion equal to the effective date. Analyze sales and re-sales of the same properties Property adjustments  Location Compensate for differences in the locational attributes of the subject property and the comparables Adjustment can be based on land values

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter Elements of Comparison, continued  Physical characteristics Size of site and building Condition, quality, and age of improvements Property amenities Functional utility  Economic characteristics More or less rent More or less expenses  Use/zoning  Non-realty components of value

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter Problems Suggested solutions begin on page 422.

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter Problems 11 and 12—Suggested Solutions