1. The Student Handbook to T HE A PPRAISAL OF R EAL E STATE 1 Chapter 17 The Sales Comparison Approach

2. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 17 2 The historical approach to value. The value of the subject property is derived by comparing it with prior sales of similar properties. This analytical tool is difficult to prepare but easily understood. The common sales comparison grids will be introduced and explored.

3. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 17 3 Table 17.1 Sales Comparison Grid

4. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 17 4 Sales Comparison Grid Relationship to Appraisal Principles Supply and Demand Substitution Balance Externalities Applicability and Limitations Nearly always applicable Sales comparison is valid even when buyers are paying for income. Prior sales of the subject are also evidence of value.

5. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 17 5 Procedure 1. Research the market for sales, listings, offerings, and pending sales. 2. Verify information per the scope of work. 3. Select relevant units of comparison. 4. Look for relevant differences in the comparable properties. 5. Reconcile the value conclusions into a single point opinion or range.

6. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 17 6 Researching Transactional Data MLS data To prevent bad data from affecting the analysis, more data is better than less. Verifying Transactional Data Selecting Units of Comparison Price per sq. ft. gross living area Price per sq. ft. gross building area Price per bedroom Price per room

7. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 17 7 Table 17.2 Comparable Land Sales Looking at the gross sale prices, this data does not seem comparable. When a unit of comparison (price per acre) is applied, the data shows consistency.

8. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 17 8 Analyzing and Adjusting Comparable Sales The adjusted price is the indicated value of the subject. The number of comparables required depends on the assignment conditions. Elements of Comparison Identification and Measurement of Adjustments

9. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 17 9 Suggested order of adjustments Real property rights conveyed Financing terms Conditions of sale Expenditures made immediately after purchase Market conditions (time)

10. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 17 10 Table 17.3 – Analysis Based on Price per Square Foot of Land, Including Building

11. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 17 11 Problems Suggested solutions begin on page 365.