Tuesday, March 15, 2016

Home Buyers MUST Use Five Best Comps to Value a Subject

In this example, the subject (a single family home) is located in Orlando, with the following attributes: 15 year old and 1,500 SF of bldg area on a 6,000 SF lot. 

Let's search for ten best comparable sales ("comps") within 1 mile radius of the town, but constraining all three variables - Land, Bldg and Age - to 20% range and time adjusting all incoming sales at 6% annual (.5% per month) growth:

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Five best comps based on closest distance are now chosen from the pool of ten comps:
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Let's take a Spatial look into the comps pool as well as the final five (green ones):

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Now, let's take a look at the Comps Grid to understand how to interpret the final value. While the most Probable Value is the Median Adjusted Sale Price (ASP), the 25th to 75th Percentile Range is the most Probable Value Range for a potential home buyer, although an aggressive investor might consider a lower value range, say up to the 25th Percentile, while a buyer bent on outbidding the competition might consider a more lax value range, say above the 75th Percentile.

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Visit the Homequant site to learn how to value a subject using optimal selection criteria and adjustments, zeroing in on the final five, as well as the value parameters.


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