The Comparative Approach Ing. David Slavata, Ph.D. Property Valuation

Principle It is necessary to have at least two real estates with nearly no differences (flat A, flat B) Flat A (valuated) the unknown price, the other especially technical and legal parametres are known Flat B (comaprative) known price, known technical and legal parameters

Methods Direct comparative Using the coefficients Professional balance sheet Using the direct increases and reductions Using the coefficients Direct with no representative Undirect with representative estate

Example Valuate multiflat house in the village of Svatoňovice by comparative approach. Built from bricks, insulated. In the house there are 4 similar flats 2+1. Appartement area 57m2. No balcony. Use the comapartive methodes. The year of construction: 1963.

The advertising database Flat č. Locality Rooms Price Techn. condition 1 Velké Heraltice sádek 2+1 390000 - 2 Vítkov 3+1 650000 + 3 580000 Appreciated flat Svatoňovice ?

Professional balance sheet methode CV1 = 1/n x SUM SPi

Comparative Value Comparative Value 1 2 3 Velké Heraltice sádek 2+1 Flat Locality Rooms Price correction 0,85 1 Velké Heraltice sádek 2+1 390000 2 Vítkov 3+1 650000 3 580000 Comparative Value

Advantages and disadvantages Simple methode Assumption of high homogenity of flats Timeliness Sample of usage: Flats for instance

Methode of comparison, 1.Direct. Using of increases and reductions due the diferences between valuated and comparable flats. 2. Using the coefficients express of differences.

Direct methode using increases and reductions CV2a = [(SPA +/- sum IRAi) x W1 + (SPB +/-sumIRBi) x W2 +….+(SPX +/- sum IRXi) x Wz] / W1 + W2+ … + Wz

Advertising database 1 2 3 Appreciated flat Velké Heraltice sádek 2+1 Locality Rooms Price Techn. condition 1 Velké Heraltice sádek 2+1 390000 - 2 Vítkov 3+1 650000 + 3 580000 Appreciated flat Svatoňovice ?

Calculation CV = (+390 x 0,85 + 50 +0 + 39 +650 x 0,85 – 100 – 50 – 50 CV = Kč/flat

Using the coefficients express of differences CV2b = sum ISPCi / n ISPCi = SPi / Idi Idi = k1 x k2 x k3 x…..x kn

Procedure To get the database with the comparative fltas as homogenuos as possible. The bid prices of flats should be corrected by the reduction coefficient. Selection of signs of differences should be set the coefficients of differences (k) By multiplicating of coefficients we get the Indexes of differences for each comparative flat. The selling price should be devided by the Index of difference for each flat. By the average of adapted selling prices we get the comparative value of the the flat.

Sestavení databáze 1 2 3 Appreciated flat Velké Heraltice sádek 2+1 Locality Rooms Price Techn. condition 1 Velké Heraltice sádek 2+1 390000 - 2 Vítkov 3+1 650000 + 3 580000 Appreciated flat Svatoňovice ?

Creation of coefficients K1……….. Rooms K2……….. Locality K3………. Technical condition

Value of coefficients K1: 2+1…….. 1,00 3+1……… 1,12 K2: 2+1…….. 1,00 3+1……… 1,12 K2: Svatoňovice. 1,00 Vítkov…….. 1,12 Sádek……… 0,90 K3 Standard… 1,00 -…………… 0,90 +………… 1,1

Calculation Price Comparative Value Č. Cena Korekce 0,85 I 1 390 331,5 1,00 … 2 650 552,5 1,12 3 580 493 Comparative Value

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