The Direct Comparison Approach Flashcards
what are the 5 steps to the DCA approach
1) Research the data on real estate transactions
2) Verify the data
3) select units of comparison
4) Analyse and adjust the comparisons and
5) Reconcile the value indications
The principle of _______________ holds that the value of a property tends to equal the cost of acquiring tan equally desirable substitute property.
The principle of substitution holds the value of property trends to by set by price that would be paid to acquire a substitute property of similar utility and desirability within a reasonable amount of time.
In the sequence of adjustments, when is an adjustment for time made?
Time would be considered an adjustment for market conditions and so it would be the last transactional adjustment made before any property adjustments are made
A)reconciliation is inherent throughout the appraisal process
B)reconciliation is done the the three approaches to value have been completed
C)Reconciliation involves the appraiser asking several questions about the data and techniques in the various approaches applied.
True statements about reconciliation
_______ is a qualitative technique used to study comparable studies.
ranking analysis is a qualitative technique analyzing comparable sales. Ranking in descending or ascending order of desirability and analysed to determine its position relative to the subject.
does the direct comparison approach reflect market behaviour and use a combination of qualitative and quantitative approaches to account for dissimilarities in the comparables.
Yes it does
Philip was asked to appraise the site of a potential apartment building containing 25,000 sq ft. Land zoned R4 which permits density of 40 units to the acre. A 25,000 sq ft R6 sikd 2 blocks away. How would you treat the r6 sale?
philip would use this sale to develop a sale price per developable unit as an indicator of the subjects value. 25,000/60 difference would account for different density.
give 3 examples of quantitative analysis
Grouped data
Statistical analysis
Scenario anaylsis
give one example of qualitative analysis
Trend analysis
is subjects HBU relevant to the hbu of the comparables that are selected
Yes, the subject property’s HBU provides the basis for the research and analysis of comparable sales and therefore is relevant to the highest and vest use of the comparables that are selected.
adjustments for real property’s rights conveyed reflect
differences in the rights of realty transferred between the subject and the comparables.
4 factors consider when using the DCA method of appraisal to value a house
1) Is there an adequate number of comparables that can be used for comparison
2) whether the comparables being used can be classified as recent sales
3) whether the dimensions of a comparable property’s lot are different from the subject property’s lot
4) whether or not the comparables are similar to the subject with respect to legal title
what are typical units of comparison for an office property
price per sq ft of gross building area,
price per sq ft of net rentable area
price per sq ft of usable area
what is not a typical unit of comparison for an office property?
price per sq ft of building site
Edna has been researching a property transaction where a neighbourhood shopping centre sold from ABC to a subsidiary of itself in order to transfer tax obligations. How would you catergorize this transaction?
a non arms length transaction
if a seller arranged a buydown offering the buyer an interest rate of 1% below the market rate on an one store house in coquitlam. what should you consider
the buyer may have paid more than the market value because of below market financing
non market financing arrangements only warrant adjustments to the sale price of comparable properties if the market data suggests that they affect value
an opinion of market value via the direct comparison approach is through the eyes of :
a well inform purchaser
in paired data analysis, an adjustment derived from a single pair of sales is not necessarily indacitive of market value
True
Regression adjustments developed from a given statistical model can not be mixed with other market adjsutments developed from paired slaes analysis or other market data comparison techniques
true
when preforming a graphic analysis, a simple graphic display of grouped date may reveal market trends
true
when performing a paired data analysis the difference measured when analyzing pairs of adjusted values always represents the actual difference attributable to the distinguishing characteristic
FALSE. Special care must be taken when analysing pairs of adjusted values because the difference measured may not represent the actual difference attributable to the distinguishing characteristics. The difference may include other aspects of the property, not just the one characteristic being studied.
A condition of sale adjustment reflects
the differences between the motivations of the seller and buyer on the date of sale of a comparable and the typical motivations of buyers and sellers as described in the definition of value
adjustments are made
to the comparable to make them like the subject
In analysing the highest and best use, the market usually limits the number of alternative to a few logical choices.
True
in comparative analysis, quantitative adjustments are derived and applied to the sale prices of the comparable properties
adjustments are made to make it like the comparables
qualitative analysis is used to determine which comparable sales are inferior, similar or superior to the subject property for the specific element of comparison
true
