Comparative Sales Approach

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Generally, this method compares similar homes sold in the two year period prior to the tax year you wish to challenge using data gleaned from the assessor’s office, the county clerk’s office, the MLS or a professional appraiser.

Contents

Pick similar properties

Select at least three similar properties to yours and in the same area. Be sure to make photocopies of the data for these other properties.

If you wish to conduct your own analysis using the comparative sales approach, then the property to which you wish to compare to your own should have the following similarities:

  • Geographic Find property as close to your own as possible; (both in vicinity and type of neighborhood) and
  • Structural Make sure the other property is the same kind of building. For example, compare a ranch house to your house if your house is a ranch. Compare a two story to a two story. Compare a house with a full basement to your house if your house has a full basement.
  • Lot size Find lots the same size as yours;
  • Square footage Find houses with the same square footage as yours;
  • AgeMake sure you are comparing another home built at the same time as yours.
  • Quality of construction
  • Number of garages
  • Swimming pool, fireplaces
  • Remodeling Note improvements to kitchen or baths
  • Storm windows or replacement windows
  • Patios, Loggias, Decks
  • Upgraded landscaping and outdoor lighting
  • Sales Price
  • Sales or Financing concessions
  • Date of Sale (within 4 months of last annual assessment date)

Make Adjustments

No two properties are exactly alike. Therefore, the other properties to which yours is compared have to be “adjusted” to reflect these differences. If the other property has a pool and yours doesn’t then you have to add value to the other property. If the other property does not have a deck and yours does, then you have to subtract value.

The Uniform Residential Appraisal Report is the standard form used for purposes of comparing properties. Click [1] to use their template to fill in the information gathered to make your adjustments.

The form breaks down the property as follows:

  • Address
  • Proximity to Subject Property
  • Sales Price
  • Price/Gross Liv. Area
  • Source of Information

Value Adjustments

  • Sales or Financing Concessions
  • Date of Sale (comparable properties must have sold prior to the assessment date)
  • Location (if comparable properties have better locations, (e.g. end of a cul-de-sac versus being on the corner of a heavily traveled street)
  • Leasehold/Fee Simple
  • Site
  • View (Ocean or wooded lot or mountain range versus a parking lot or industrial setting or urban blight)
  • Design and Appeal
  • Quality of Construction
  • Age (Adjust 1% of selling price for each year difference)
  • Condition (presence of termites? Cracks in the foundation?)
  • Above Grade room count: [Gross Living Area]
  • Basement and Finished Rooms below Grade
  • Functional Utility
  • HVAC (central air conditioning versus window units)
  • . Energy Efficient Items (Compare energy efficient features like thermal windows)
  • Garage/Carport
  • Porches, Patio, Deck, Fireplaces

Approaches to making Value Adjustments

  • Matched Pair Analysis: Compare sales of another property to yours whereby the other property is substantively alike to yours except for one feature for which value is being sought.
  • Cost Data Analysis: Reproduction cost new (what it costs to replace an item) less depreciation from all causes occurring thereafter. This data can be found through several sources, including Marshall & Swift Residential Cost Handbook; the Boeckh Building Manual; the Residential Cost Handbook; the Dodge Building Manual and the Means Cost Calculator. Many of these items can be found at your county library.

Add and subtract value

Assign positive and negative dollar amounts for features the comparables have or don’t have in comparison to your property. For features that the comparables have that yours doesn’t, subtract dollars. Conversely, for features yours have that comparables don’t have, add dollars.

Total

Once you have arrived at bottom line figures for your comparables, then it is necessary to come up with a final figure. Since there are usually at least one or two properties that are more comparable to yours than the others, it is the common practice to weight the properties that are more alike more heavily. To do this, take the property that is most comparable and double its price. Then add the values of the other two comparables and divide by four. The net result is the value of the subject property.





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