Definition of sales comparison approach – SCA’
Approach sales comparison is the method of real estate evaluation, which compares a piece of property to other properties with similar characteristics that were sold recently. The method takes into account the influence of individual characteristics on total value of the property. This means that the total value of the property is the sum of the values of all its features. Real estate agents and appraisers can use this approach when evaluating properties for sale.
Penetration approach sales comparison – SKS’
Approach sales comparison involves looking at local properties to see what they have in common. This allows the appraisers to determine the value of real estate features, such as fireplaces or two car garages, and requires less sophisticated statistical methods of testing for the implementation of properties in a wider geographical area.
Appraisers and agents tend to base their comparisons on real restate, with very similar characteristics. For example, the house should be compared with properties that have the same number of rooms, garages and bathrooms. The comparison must include the house about the same footage on parcels of land that are about the same size. Approach sales comparison is often used in homes adjacent to the property being assessed.
How To Apply The Sales Comparison Approach
Approach sales comparison is used as the basis for a comparative market analysis real estate professionals.
The geography where the property is located and the local conditions of the terrain can have a direct impact on the value assigned to all comparable properties. For example, several houses located in close proximity to the airport was all have problems of noise, which will become part of their sales comparison. If the same home was located in a quiet part of the city, the rating would be different. It would be more appropriate to compare houses in the same area than a house in another part of the city, even if they have the same architectural designs.
Other external factors can come into play with assessment, such as the level of contamination on site or in the surrounding area. The state of the market at the time of sale also has a significant impact on the price.
Overall condition of the house can affect the valuation in the sales comparison approach. For example, two houses may be of the same design with the same number of rooms, but one of the houses may need repair. There may be termites, problems with the plumbing or the device that needs to be replaced. These factors will influence the value of the property, regardless of the availability of comparable objects.