1. Applications of the Sales Comparison Approach

2. Quantitative Adjustment Example
Bracketing the subject allows the analyst to extract adjustment rates easily on a spreadsheet program.
Three different grids are presented to show how the rate of adjustment can be extracted. The first grid shows a rate of $10 per square foot, the second shows $40 per square foot, and the third shows $30 per square foot.
Chapter 20

3. Matched Pair Analysis Using a Sensitivity Analysis for Sales
Subject
Comparable 1
Comparable 2
Price
$510,000
$400,000
Rights transferred
fee simple
0.00%
leased fee
-5.00%
Subtotal
$380,000
Financing
cash to seller $0
Conditions of sale
arm’s-length
motivated seller
5.00%
$535,500
Expenditures after sale
none
minor repairs
$562,275
Market conditions
current
one month ago
0.50%
five months ago
2.50%
Current, cash-equivalent price
$565,086
$389,500
Location adjustment
Northeast Side
Zoning
Commercial-1
Site size (sq. ft.)
20,000
Building design
one story/avg.
Const. quality
masonry/avg.
Improvement age
14 years
Improvement condition
average
First floor area $10/sq. ft.)
9,000
12,000
-30,000
6,000
30,000
Second floor area
Above-ground building area
Finished area
75%
Basement area (sq. ft.)
Functional obsolescence
typical only
Other
Net adjustment
− $30,000
$30,000
Indicated value
$535,086
$419,500
Chapter 20

4. Revised Matched Pair Analysis Using a Sensitivity Analysis for Sales
Subject
Comparable 1
Comparable 2
Current, cash-equivalent price
$565,086
$389,580
First floor area $40/sq. ft.)
9,000
12,000
− 120,000
6,000
120,000
Indicated value
$445,086
$509,580
Chapter 20

5. Second Revised Matched Pair Analysis Using a Sensitivity Analysis for Sales
Subject
Comparable 1
Comparable 2
Current, cash-equivalent price
$565,086
$389,580
First floor area $30/sq. ft.)
9,000
12,000
− ,000
6,000
90,000
Indicated value
$475,086
$479,580
Chapter 20

6. Qualitative Analysis Chapter 20 Subject Comparable 1 Comparable 2
Address
597 E. North St.
579 E. Hill St.
593 N. Webb Ave.
571 E. Oak St.
Sale price
$500,000
$550,000
$625,000
Rights transferred
fee simple
Financing
cash to seller
contract
superior
Conditions of sale
arm’s-length
Expend. after purch.
none needed
minor repairs
inferior
Date of sale
today
July
January
June
Location/site/view
$80,000 site
$65,000 site
$85,000 site
Building design
one story/avg.
Const. quality
steel/average
brick/equal
frame/inferior
steel/equal
Improvement age
8 years
12 years
9 years
5 years
Imprv. condition
average
equal
Abv.-grd. bldg. area
6,086 sq. ft.
5,000 sq. ft.
6,000 sq. ft.
8,000 sq. ft.
Basement area
3,500 sq. ft.
2,000 sq. ft.
4,500 sq. ft.
Finished basement
unfinished
finished
Functional utility
Garage
2-car att.
Other
none
in-ground pool
Overall comparison
much inferior
nearly equal
much superior
Chapter 20

7. Quantitative Adjustment and Quantitative Analysis
Subject
Sale 1
Sale 2
Sale 3
Address
12345 N. Main Street
209 S. Main Street
1209 S. Elliot Street
1985 James Street
Data source
MLS
Gross sale price $0
$425,000
$458,000
$475,000
Price/sq. ft. & /acre
$3.35
$146,059
$3.59
$156,474
$3.88
$168,919
Rights transferred
fee simple
0.00%
Subtotal
Financing
assume cash
contract sale
-5.00%
cash sale
$138,756
Conditions of sale
arm’s-length
arm’s- length
Expenditures after sale
none assumed
none
demolition cost
3.20%
$161,482
Date of sale 0.25%
now
4 mos.ago
1.00%
6 mos. ago
1.50%
8 mos. ago
2.00%
$140,144
$163,904
$172,297
Topography
level
difficult
inferior
Location
Smallburg
Hensenville
superior
Access
3 points
2 points
Visibility
avg./industrial
isolated
equal
highway visibility
Flood area
Road frontage
300
325
350
Average depth
400
390
425
Size (square feet)
130,680
126,750
127,500
122,500
Size (acres) 3
2.91
2.927
2.812
Zoning
industrial
Utilities
all public
Other factors
rail siding
Indicated value/acre
more than
similar to
less than
per acre
Chapter 20

8. Review Exercise 4. Suggested Solution
Subject
Comparable 1
Comparable 2
Address
12345 N. Main St.
11232 West St.
1233 East St.
Price per sq. ft. GBA/price
$163.79
$475,000
$125.00
$525,000
Rights transferred
fee simple
0.00%
Financing
cash to seller
Conditions of sale
arm’s-length
Post-purchase repairs
none assumed
none reported
Date of sale
current
6 months ago
9 months ago
Current, cash-equivalent price
Location
Greenleave Addn.
Site size (acres)
1.25 1
10,000
0.75 acres
15,000
Site view
golf course
residential
Building design
2-story/average
Construction quality
wood/frame/avg.
masonry/frame
-10,000
frame/masonry
Improvement age 23 18
Improvement condition
average
Room count
9/4/2½
11/4/3½
-5,000
12/4/4½
Abv.-ground building
2,943
2,900
4,200
-55,000
Basement
756
1,200
1,500
-15,000
Basement finish
650
1,000
500
5,000
Functional obsolescence
Garage/parking
3-car att. garage
4-car att. garage
Miscellaneous
irrigation
equal
Porches, patios, etc.
enclosed porch/deck
none
20,000
Features
standard
Fireplaces
1 fireplace
Net adjustment
-70,000
Indicated value
$465,000
$455,000
Chapter 20

9. Review Exercise 5. Suggested Solution
Chapter 20

10. Review Exercise 6. Suggested Solution
Chapter 20

11. Review Exercise 7. Suggested Solution
Item
Subject
Comparable 1
Comparable 2
Comparable 3
Sale price
$200,000
$175,000
$275,000
Price/AGLA
$80.00
$76.09
$43.65
Date of sale
8 months ago
4,000
4 months ago
1,800
2,800
Location
Salty Creek
Johnson Acres
Site
5 acres
1 acre
12,000
0.75 acre
17,000
View
residential/pond
residential
5,000
Design/appeal
2-story/avg.
Const. quality
brick/good
brick/average
Age
5 years old
1 year old
-12,000
2 years old
-9,000
12 years old
21,000
Condition
average
Room count
10/4/3½
10/4/2½
2,000
11/4/2½
AGLA (20)
6,000
2,500
70,000
2,300
74,000
6,300
-6,000
Basement area (8)
1,200
6,400
1,000
8,000
-4,000
Basement finish (8)
1,500
900
4,800
none
-2,400
Functional utility
HVAC
GFA/cent. AC
Garage/carport
3-car att.
2-car att.
garage
Porch/patio
screened porch
Fireplace(s)
2 fireplaces
1 fireplace
Kitchen
standard kitchen
Net adjustment
102,200
120,800
18,400
Indicated value
$302,200
$295,800
$293,400
Chapter 20

12. Review Exercise 8. Suggested Solution
Item
Subject
Comparable 1
Comparable 2
Sale price
$80,000
$95,000
Price/AGLA
$80.00
$47.50
Date of sale
2 months ago
400
4 months ago
1,000
Location
Palmer’s Addition
Site
1/3 acre
View
residential
Design/appeal
bilevel/avg.
1-story/avg.
2-story/avg.
Construction quality
brick/average
Age
32 years old
33 years old
Condition
average
Room count
5/3/02
6/3/02
9/4/02
AGLA (25)
2,000
-25,000
Basement area (10)
1,000 sq. ft.
no basement
10,000
Basement finish (12,000)
1,000 sq. ft. w/o
unfinished
12,000
Functional utility
HVAC
GFA/cent. AC
Energy efficiency
standard
Garage/carport
2-car att. garage
Porch/patio
deck
Fireplaces
1 fireplace
Kitchen
standard kitchen
Fence/pool
none
Net adjustment
12,400
-2,000
Indicated value
$92,400
$93,000
Chapter 20

13. Review Exercise 9. Suggested Solution
Residential Sales Comparison Approach Grid
Item
Subject
Comparable 1
Comparable 2
Comparable 3
Address
1200 W. 400 N
1500 W. 350 N
500 N. 150 W
150 S. 50 W
Price
$175,000
$141,900
$189,000
$169,000
Price per GLA
$87.50
$80.99
$90.00
$73.48
Days on market
334 49 4
Financing
conventional
contract sale with
contract sale
mortgage
Concessions
no concessions
favorable terms
-9,500
Date of sale/time
today
6 months ago
14 months ago
7 months ago
Location
1200 W 400 N
1500 W 350 N
500 N 150 W
150 S 50 W
Leasehold/fee simple
fee simple
Site
27 acres
12 acres
9,000
22 acres
2,000
8 acres
15,000
View
wooded/school
wooded
Design and appeal
2-story
1-story
Construction quality
log construction
wood frame/
brick
stone
Age
10 years
6 years
-8,000
7 years
-6,000
9 years
-2,000
Condition
average
Room count
8/3/02
7/3/02
9/3/02
8/4/03
Gross living area
1,752
6,200
2,100
-2,500
2,300
-7,500
Basement
1,400
no, crawl space
16,800
1,000
4,800
Finish
none
none WO style
-3,000
Functional utility
average/log
Heating/cooling
GFA/CAC
GHW/no AC
3,500
Energy-efficient items
standard
Garage/carport
2-car att./600
2-car det./600
Porches
screened porch
fence, shed,
screened
-3,500
porch
5,500
porch, 528-
sq.-ft. shop
Fireplaces
1 fireplace
Fence, pool, etc.
Other
appliances, etc.
equal
Net adjustment
30,500
-17,700
13,800
Adjusted sale price of comparable
$172,400
$171,300
$182,800
GLA Factor 25
The solution above is not the only possible answer. Many of the adjustments are loosely based on percentages rather than dollar amounts from matched-pair extractions. The site adjustments are based on the site values. The age adjustment is loosely based on an estimate of $2,000 per year, which was extracted as follows:
Chapter 20

14. Review Exercise 9. Suggested Solution, continued
Item
Comparable 1
Comparable 2
Comparable 3
Address
1500 W. 350 N
500 N. 150 W
150 S. 50 W
Price
$141,900
$189,000
$169,000
Financing, etc.
-$9,500
Landscaping
-$5,000
-$3,000
Land value
12 acres
-$18,000
22 acres
-$25,000
8 acres
-$12,000
Building value
$118,900
$149,500
$154,000
(all components)
Building reproduction cost
$67
$117,384
$65
$136,500
$64
$147,200
Basement $0
$15
$15,000
Garage
$15
$9,000
Porches, etc.
$3,000
$7,000
$4,000
Reproduction cost
$129,384
$167,500
$175,200
Depreciation
$10,484
$18,000
$21,200
(building value - reproduction cost)
Age of improvement $6 $7 $9
$ depreciation per year
$1,747
$2,571
$2,356
Chapter 20