1. The Student Handbook to T HE A PPRAISAL OF R EAL E STATE 1 Chapter 18 Adjustments and Analytical Techniques in the Sales Comparison Approach

2. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 18 2 Elements of Comparison 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

3. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 18 3 Conditions of sale  Motivated sellers  Motivated buyers  Related parties  Sales of adjacent properties  Sales with only one buyer or only one seller Expenditures 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

4. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 18 4 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. Location adjustments  Compensate for differences in the locational attributes of the subject vs. the comparables.  Adjustment can be based on land values.

5. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 18 5 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

6. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 18 6 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

7. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 18 7 Table 18.1 Agricultural Land Sales

8. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 18 8 Figure 18.1 Price per Acre

9. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 18 9 Cost analysis. Depreciated cost can be used to support adjustment rates in the sales comparison approach.

10. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 18 10 Capitalization of Rent Differences  Gross rent multipliers  Direct capitalization of a single year’s income Sequence of Adjustments  The logic behind the order

11. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 18 11 Sequence of Adjustments

12. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 18 12 Qualitative Analysis  Relative Comparative Analysis Narrative discussion of issues usually just listing the data Discussion of what is inferior and what is superior

13. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 18 13 Table 18.2 Ranking Analysis

14. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 18 14 Reconciliation  Evaluating adjustments  Use of comparison and real property interest

15. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 18 15 Problems Suggested solutions begin on page 365.

16. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 18 16 Problems 11 and 12