What is the number one rule of adjusting comparables?

Rules for making adjustments: ALWAYS adjust the comparables. Never adjust the subject property.

What is the number one rule of adjusting properties when using the sales comparison?

In order to ensure a realistic sales price, the comparison properties must be in line with the property that is going to be listing. This means that things like the number of bedrooms, bathrooms, lot size, and square footage of the home should be similar.

How do you adjust comparables?

Adjustments are made to the comparables in the form of a value deduction or a value addition. Adding or deducting value. If the comparable is better than the subject in some characteristic, an amount is deducted from the sale price of the comparable.

What is the proper sequence when adjusting comparable properties?

It is important that adjustment are made in the proper order. First come transactional adjustments, followed by market condition adjustments, location adjustments and finally physical elements of comparison.

How do appraisers adjust comparables?

Adjustments are calculated by multiplying an adjustment factor times the quantity difference between the subject and comparable. For example, if the GLA for the subject is 2200 sq ft and for a comparable, 2000 sq ft, the difference, 200 sq ft would be multiplied by the adjustment factor.

Comparable Sales Approach - Real Estate Math (3 of 18)

How do you adjust for comparable sale?

An adjustment is made for these differences between the Subject and Comparable Sale with the following formulas: 1. Base Living Area Rate = Quality Rate x Design Factor x Construction Class 2. ((Subject Rate / Comparable Rate) – 1) x Time Adjusted Sale Price.

How are CMA adjustments calculated?

How much should you adjust for square feet? A common rule is 1/3 of the average price per square foot of comps. If most homes are selling for $150/sqft, then your adjustment should be $50/sqft.

How are adjustments made in the sales comparison approach?

Adjustments are made to the comparables in the form of a value deduction or a value addition. Adding or deducting value. If the comparable is better than the subject in some characteristic, an amount is deducted from the sale price of the comparable.

Which factor is important in comparing properties under the sales comparison approach to value?

Which factor is important in comparing properties under the sales comparison approach to value? The answer is date of sale. In the sales comparison approach, an estimate of value is obtained by comparing the property being appraised (the subject property) with recently sold comparable properties.

What is the basic principle in the sales comparison approach?

The sales comparison approach is based on the basic substitution principle. Buyers will not purchase a property priced more than its comparables in the real estate market; why pay more when a similar property in the same area was valued at less?

What does the rule of three say about comparables when preparing a CMA?

The first step for an agent preparing a CMA is to find three homes that have sold recently (within the past 6 months at most, but preferably 3 months). These three homes should be as similar and located as closely together as possible.

How are real estate comparables calculated?

Price per square foot: Real estate agents use price per square foot to identify comparables. Divide the sale price of a home by its square footage, then compare that number to your own desired price per square foot.

What is adjusted sales price of comparables?

adjusted sales price. in appraisal, the indicated price of a comparable property after adjustments have been made to account for differences between comparable and subject properties. Example: The comparable property is identical to the subject property except that the comparable has an additional half bath.

What is the number one rule of adjusting properties when using the sales comparison quizlet?

Rules for making adjustments: ALWAYS adjust the comparables. Never adjust the subject property.

What is comparison method of valuation?

The comparison method to property valuation is an approach which uses the value of recently sold comparable assets to determine the value of a property. In real terms this will mean looking at similar properties within the area and using the sales prices they achieved to guide a valuation decision.

Which of the three approaches to value determines the value of a subject by using comparables comps )?

The most frequently-used and accepted approach to determining value in real estate appraisal practice is the sales comparison approach. This approach to value bases its opinion of value on what similar properties (otherwise known as “comparables”, or “comps”) in the vicinity have sold for recently.

What are the 3 main approaches in property valuation?

What are the common 3 approaches to property valuation?

There are three types of approaches to value and they are sales comparison approach, cost approach and income capitalization approach. The sales comparison approach is the most commonly used approach in real estate appraisal practice for determining the value.

What formula does an appraiser use in the sales comparison approach?

Take the average cost per square foot for all comparable homes and multiply that number by the square footage of the home being appraised.

What are the elements of comparison in the sales comparison approach?

Sales approach compares a subject property to similar comparable properties that have recently sold. Also known as the SCA, the sales comparison approach takes into account property characteristics such as location, square footage, age, condition, lot size, and sale date.

What appraisal principle is the basis for using a CMA to determine value?

What appraisal principle is the basis for using a CMA to determine value? The highest price a property would bring if freely offered on the open market, with both a willing buyer and a willing seller, is known as: the CMA.

How do I complete a CMA?

Which of these is a good factor to use when comparing properties for a CMA?

What is the maximum gross adjustment on an appraisal?

The Gross Adjustment is the total of all adjustments in absolute terms. In other words, the adjustments are added without regard to sign. In residential appraisal, gross adjustments generally may not exceed 25% of the sale price of the comparable sale.

When should I adjust my appraisal time?

Appraisers can determine a market condition adjustment based on time (also known as a time adjustment). If the most similar sale sold 4 months ago and the market is either increasing or decreasing then an adjustment can be determined to bring that sale to current market conditions.