What are the steps in the sales comparison approach?
Steps in Sales Comparison Approach
- Find recent sales of similar houses in the subject’s market area.
- Verify data regarding comparables.
- Compare each sale with the subject to determine the differences.
- Make adjustments to determine the dollar differences.
- Derive an indicated value after making adjustments.
How do you use the cost approach?
Steps in the Cost Approach Method
- Estimate the reproduction or replacement cost of the structure.
- Estimate the depreciation of the improvements.
- Estimate the market value of land.
- Deduct accrued depreciation from the reproduction/replacement cost.
- Add the depreciated cost of the structure to the estimated value of the land.
When do you use the sales comparison approach?
The approach is particulary attractive when there are many comparable transactions taking place. This is the case for residential real estate. The sales comparison method is based on the premise that a buyer would not pay more for a property than others are paying for similar properties in the current market environment.
How does the sales comparison approach to real estate valuation work?
The sales comparison approach considers the selling prices of similar, recently sold properties. Those sales prices are adjusted to reflect the time, conditions, and differences between the comparable properties and the subject property. The result of the adjustments is a subject value estimate.
How are price adjustments made in sales comparison?
Price adjustments are made for differences in the comparable and subject property. The sales comparison approach is the foundation for the real estate professional’s CMA, Comparative Market Analysis.
Are there different approaches to selling a product?
Though every sales person will use different kinds of sales approaches in their careers, these are approaches that should be considered. No two sales people are alike. Over the years, sales people refine their techniques and methods until they find something that works best for them. And there is no one best sales approach.