Sales Comparison Approach

The Sales Comparison Approach is the process of developing a market value estimate for the subject real property from sales of improved comparable properties in the same or similar market area.  The comparable sales are compared to the subject property (property being appraised) and adjusted for differences in comparability.  The adjusted value indications for the subject are then correlated (reconcilled) into an estimate of value for the subject real property being appraised.

The Sales Comparison Approach is developed in spreadsheet format that comparews the comparable sales to the subject in a comparison grid.  The grid calculates the sales prices/square foot (s.f.) as the most widely accepted unit of comparison.  The grid also calculates the percentage increase or decrease indicated by any paired sales in the grid and also compares assessment ratios and assessments/s.f. of the sales to the subject.  The grid also calculates the the GIM and Overall Cap Rate for the sales that were income producing at the time of sale.  The value estimate for the subject property utilizes the attached adjustment table that allows the appraiser to make adjustments to the comparable sales from which the estimated value is calculated.  Also calculated is the average annual rate of inflation based on as many years of analysis as you wish.

Also included as a valuable tool to value the subject are three charts that graphically present the sales in order by time of sale, s.f. land/s.f. building and size (S.F.) of building area.  The charted sales utilize a trendline analysis that allows the injection of the subject onto the trendline at it relative size in relation to the sales in the charts.  This analysis creates three additional value estimates per square foot.  The final estimated value of the subject per square foot is obtained by an analysis of the data presented which is then applied to the square foot area of the subject resulting in the estimated value of the subject by the Sales Comparison Approach.

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