Home Appraisal FAQs - Appraisals What is an appraisal comparable sale or lease?
What is an appraisal comparable sale or lease?

Comparable SalesThe three appraisal approaches to value, Cost, Sales Comparison and Cost Approaches, utilize comparable properties to analyze the value of a subject property. In the Cost Approach, the vacant land value is typically estimated by a sales comparison of vacant land sales or improves sales less the contributory value of the improvements. In the Sales Comparison approach, recent similar sold properties in the area are used, with adjustments for differences to arrive at an indicated value. In the Income Approach, current similar lease or rented properties are used, also adjusting for their differences, and arriving at a fair market rent.

Following is a list of some of the relevant adjustment considerations.  The best comparable sales are usually those that are most similar to the subject:

  • Concessions - is a payment from a landlord or seller that benefits a tenant or buyer, which reduces a sellers net proceeds from the sale or rental.
  • Sales Time - typically within 3 to 6 months of inspection for residential properties and up to 3 years are the best indicators of value.
  • Location - properties in the same market area, typically not exceeding 1 mile in suburban areas.
  • Lot Size - smaller variations in size are found with urban properties and greater in rural properties.
  • Quality of Construction - materials, design and style.
  • Condition - overall condition of the property.
  • Room and Living Area - gross living area is a significant driving force of value.
  • Amenities - such as; basements, heating, air condition, patios, fireplaces, pools and other amenities.

Typically, more urban and developed areas will have a greater number of properties that more closely match the above factors. In rural area, the number of properties are less and often require greater adjustment. An experienced real estate appraiser can identify the best comparable sales for a given appraisal problem.

Still have a questions?  Nexus Analytix™ can provide answers for your real estate appraisal questions. Please contact our offices at, Phone: (856) 985-0008 or by e-mail.

 

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