- An Element of Comparison is a categorization of property characteristics that causes real estate prices to vary. …
- •Property rights.
- •Financing terms.
- •Conditions of sale.
- •Date of sale (or market conditions),
- •Location.
- •Physical characteristics.
- •Front foot for commercial property.
What are the four elements of comparison used in the sales comparison approach?
T/F: The four elements of comparison used in the sales comparison approach include
the terms and time of sale, as well as location and physical elements about the property
.
What is unit of comparison in real estate?
Units of comparison are traditionally
related to the size or composition of a property
. … Typical units are by square foot, acre, square foot of usable area, and square foot of leasable area. Specialized properties are often compared by units depending on their use: a room, theater seat, marina slip, or garage bay.
What is the sales comparison approach formula?
Average price per square foot: Once similar homes are compiled,
take each of their sale prices and divide them by their square footage
. The result yields the cost per square foot based on the homes in the sales comparison analysis.
What are the elements of comparison in real estate?
An element of comparison is
any aspect of a real estate transaction that may affect the sales price, including the terms and conditions of the sale and the characteristics of the property itself
.
What standards do appraisers follow?
USPAP was adopted by Congress in 1989, and contains standards for
all types of appraisal services
, including real estate, personal property, business and mass appraisal. Compliance is required for state-licensed and state-certified appraisers involved in federally-related real estate transactions.
Which two factors are most critical when choosing comparables?
Which two factors are most critical when choosing comparables? are
warranties
.
What is the basic principle in the sales comparison approach?
The sales comparison approach is based upon the
principles of supply and demand, as well as upon the principle of substitution
. Supply and demand indicates value through typical market behavior of both buyers and sellers.
What is the difference between sales comparison approach and cost approach?
The sales comparison method relates the estimated value of the subject property to similar properties that have recently sold in the same market. … Instead, the cost approach estimates
the property value as the value of its components, the underlying land, and the depreciated value of the improvements
.
Is it easier to use a sales comparison approach when the properties are almost the same?
Is it easier to use a Sales Comparison Approach when the properties are almost the same?
Yes, style, size, location and age of properties that are similar are easier to compare
. … There are four properties an appraiser must value.
What is bracketing on an appraisal?
When developing a sales comparison analysis, “bracketing” refers to
selecting comparable properties with features that are inferior, similar, and superior to the subject’s features
. Most lenders require that appraiser’s “bracket” the comparables included in the appraisal analysis.
Under what circumstances might an appraiser use a 15% adjustment?
If an appraisal is performed for mortgage qualification, the appraiser may be restricted from making
adjustments in excess of a certain amount
, for example, anything in excess of 10-15% of the sale price of the comparable. If such an adjustment would be necessary, the property is no longer considered comparable.
What is functional obsolescence in real estate?
What Is Functional Obsolescence? … For example, in real estate, it refers to
the loss of property value due to an obsolete feature
, such as an old house with one bathroom in a neighborhood filled with new homes that have at least three bathrooms.
What is the first step in the sales comparison approach process?
The first step in the sales comparison approach is
to research comparable sales
. In the analysis of sales transaction data, the actual date that the sale price was agreed upon is the theoretical date of sale.
How do you adjust sales comparison approach?
The goal of the adjustment process is to
make the comparable property look more like the
subject property. So, the price is adjusted to account for valuation differences due to each of the factors from the previous section. Adjustments can be made as a direct dollar amount or a percent of overall value.
What is most accurate regarding valuation processes?
An estimate of a property’s value by an appraiser who is usually presumed to be expert in his work. A valuation placed upon property by a public officer or a board, as a basis for taxation. … This method works best when the improvements are relatively new and
estimates of depreciation
are thus more likely to be accurate.
