Monday, April 10, 2017

Homebuyers MUST Self-select 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, comprising 1,500 SF of bldg area on a 6,000 SF lot. 

Users need to create a pool of up to 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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Once the pool is created by the scoring algorithm using the criteria set forth above, users need to select Five best comps (distance radius method, meaning closest distance, has been used to evaluate the pool leading to the final five):
                             
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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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