Monday, March 14, 2016

Home Buyers MUST Choose Least Adjustment over Distance or Sales Recency

Of the three methods to evaluate comparable sales ("comps") - distance radius, sales recency and least adjustment - least adjustment is the most powerful method. 

Since most comps are pooled from a limited distance within the same neighborhood and older sales are generally time adjusted, distance and sales recency become less powerful methods than least adjustment which, in addition to sales time adjustment, incorporates adjustments for property features as well.

1. Least Adjustment

(Click on the image to enlarge)

Note - while determining least adjustment, signs are ignored. Therefore, +3,000 and -3,000 are tied. In the table above, +2,940 is a smaller number than -8,510, hence being considered the best comp here requiring the least adjustment.

2. Distance Radius

3. Sales Recency

Visit the Homequant site to learn how to use these methods to value subject properties using comp sales (totally free):

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