What is the Sales Comparison Approach?
The Sales Comparison Approach is a powerful tool that requires experience, expertise, and market knowledge to determine market value. It is based on, you guessed it, sales. After determining the subjects’ highest and best use, a search for sales similar to the subject is performed. The ideal comparable sale is the subject itself that sold yesterday. The next best comparable is identical to the subject property, located next door, with the same ownership interest of that which sold. There are no truly identical comparable sales, but this paints a picture of what we look for. The sales are verified for legitimacy, adjusted through market conditions, and then adjusted for physical and locational attributes. This typically transcends through a grid showcasing the subject and the comparable sales side by side. Comparable sales are adjusted upwards for inferior features and downwards for superior features. Adjustments can be made quantitatively (in percentages or dollars) or qualitatively (based on a subjective evaluation of characteristics). Generally, the best sales will have the least number of adjustments. The adjusted sale prices are then utilized to determine the market value of the subject.
For land, the unit of measurement will typically be per acre or per square foot, however, there are other units specific to the highest and best use. The intended use of the reconciled value can be for financing, estate planning, taxes/assessments, and condemnation, to name a few. At Steigerwaldt Land Services, the Sales Comparison Approach is a part of our Appraiser’s daily life, and we pride ourselves in the accuracy and execution of this real estate valuation method. Contact Rich in our Appraisal department today for help with your sales comparison at [email protected] or give us a call at 715-453-3274.
Your Confidence Lands Here.
-Ben Nicholson, Appraisal Specialist
