Sales Comparison Approach Flashcards
1 of 22Contributory Value
The change in the value of a property as a whole whether positive or negative, resulting from the addition or deletion of a property component. Also called deprival value in some countries.
2 of 22Comparables
An abbreviated term used by appraisers to describe properties which are similar in size, condition, location and amenities to a subject property whose value is being determined. In best usage, the thing being compared should be specified e.g. comparable sales, comparable properties, and comparable rents.
3 of 22Market Conditions
An element of comparison in the sales comparison approach; comparable properties can be adjusted for differences in the points in the real estate cycle at which the transactions occur. Sometimes called a “time adjustment” because the difference in dates of sale are often compared, although that usage can be misleading.
4 of 22Percentage Adjustments
Adjustments for differences between the subject and comparable properties expressed as a percentage of the sale price (or adjusted sale price) of the comparable property; percentage adjustments are often used to reflect changes in market conditions and differences in location.
5 of 22Distress Sale
A sale involving a seller acting under undue distress.
6 of 22Amenity
Any feature of a property that increases its value or desirability. These might include natural amenities such as location or proximity to mountains, or man-made amenities like swimming pools, parks or other recreation.
7 of 22Economic Characteristics
An element of comparison in the sales comparison approach. Comparable sales can be adjusted for differences in the attributes that affect a property’s income, such as operating expenses, quality of management, tenant mix, rent concessions, lease terms, lease expiration dates, renewal, options, and lease options such as recovery clauses.
8 of 22Qualitative Analysis
The process of accounting for differences (such as between comparable properties and the subject) that are not quantified; may be combined with quantitative analysis.
9 of 22Concessions
Additional value granted by a buyer or seller to entice another party to complete a deal.
10 of 22Regression Analysis
A statistical measure that attempts to determine the strength of the relationship between one dependent variable (usually denoted by Y) and a series of other changing variables (known as independent variables).
11 of 22Arm’s Length Transaction
A transaction in which the buyers and sellers of a product act independently and have no relationship to each other. The concept of an arm’s length transaction is to ensure that both parties in the deal are acting in their own self-interest and are not subject to any pressure or duress from the other party.
12 of 22Financing Terms
The manner in which a transaction was financed; an element of comparison in the sales comparison approach whereby comparable properties can be adjusted for differences between a transaction’s financing terms and those assumed in the valuation of the subject property.
13 of 22Adjustments
Mathematical changes made to basic data to facilitate comparison or understanding. When dollar adjustments are used, individual differences between comparables and the subject property are expressed in terms of plus or minus dollar amounts; with percentage adjustments, individual differences are reflected in plus or minus percentage differentials.
14 of 22Sales Comparison Approach
An appraisal practice which estimates the value of a property by comparing it to comparable properties which have sold recently. The process of deriving a value indication for the subject property by comparing market information for similar properties with the property being appraised, identifying appropriate units of comparison, and making qualitative comparisons with or quantitative adjustments to the sale price (or unit prices, as appropriate) of the comparable properties based on relevant, market derived elements of comparison.
15 of 22Ranking Analysis
An ordinal technique for analyzing data, commonly used in the analysis of comparable sales; a variant of relative comparison analysis in which comparable sales are arrayed into descending or ascending order of desirability and each is analyzed to determine its comparability to the subject property.
