Chapt13 - is a percentage of cost. It requires that the...

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Garrett Barnes HW Chapt 13 1,3,5,6,7, 1. The maximum price at which a buyer will buy and the minimum acceptable price to the seller, both fully informed, acting without duress and with reasonable financing, can be called the market value 3. Comps should be as physically similar as possible to the subject property in size, age, quality, location, and features, as well as the date of sale. Comps should be “arms length,” which means the sales must not be unusual in any way that affects the price of transaction. You start with a large pool of comps and then pare down based on the previous considerations until the most similar sales are selected 5. “What would the comp sell for if it were identical to the subject property?” 6. Size explains 85% of the variation in selling price from a given submarket, thus it is the single most important adjustment. 7. Feature adjustments are based on significant features within either the subject property or the comp. There are two approaches used to make feature adjustments: The first method
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Unformatted text preview: is a percentage of cost. It requires that the analyst contact contractors and estimate the cost of the single feature. The maximum adjustment will be the cost of the feature in current dollars. The appraiser needs to weigh by judgment how important the feature is to the market of typical buyers in this submarket. A systematic way to judge importance is to ask, How many properties of a similar age as the subject property and within the relevant submarket have this feature? The higher the percentage with a given feature, the more important the feature and the greater will be the adjustment as a percentage of cost. The second method is based on paired sales analysis. This is more difficult, however it is better than the first method. The problem with this method is that it can be difficult to isolate the effect of the single feature unless it is the only difference separating it from another comp...
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