Chapter 10: Direct Comparison Approach

Procedural Steps: 

1. Obtain Info
2. Analyze Data
3. Compare with Subject Property  - make the necessary adjustments, can be dollar amounts or %. 
4. Final Estimate/Reconcile 

Sources of Information - best sources are the brokerage's files and board's MLS. Also, registry land titles offices can be used. 

Comparability - the most important factor is a selection of truly comparable properties. Big adjustments illustrate poor comparability and vice versa. 

Time - the time resale method is used, sales within a short period of time.   

Significant Characteristics - location, lot size, and physical characteristics. Lot sizes are typically adjusted by the front foot/meter on a per lot basis. 

-Adjustments are made on the value basis, not cost.

-If comparable is better than the subject property - minus adjustment is made to the sale price of the comparable. If worse - a plus adjustment is req. 

-Usually, the final estimate is rounded to the nearest 500$

Reconciliation - logical reasoning process used to narrow down the value range to a final estimate. Completed reconciliation will include a final estimate and written justification.

4 step approach: 

1. Select Comparables - time/market conditions, market value 
2. Make Adjustments - time, location, lot size, physical characteristics. 
3. Establish Adjusted Sale Price
4. Complete Reconciliation - the most recent sale is the best indicator of value. The sale req. min adjustments is the most comparable.