The report should present a thorough discussion and analysis of the valuation for the assigned subject project based on sales comparison approach (Please refer to the ppt on “Sales Comparison Approach” on Titanium for more information about it). Your main job is to collect the information of newly listed subject property and the information of 3-4 recent sold properties similar to subject property (comparables) from the websites. Then conduct a thorough analysis of the subject property’s value using sales comparison approach. The relevant information on subject property and comparable properties could be found at the website providing information on real estate transactions. It is free access for everyone. You could learn about the recent listings and recent sales for any place you are interested through these websites. The most frequently used website are the following websites:
• Google: “## City Home for sale”
Sales comparison approach
• Principal • Approach
• Substitution principle
• One price rule – equivalent goods tend to sell for
• Identify sales of similar properties
• Adjust sale prices to reflect differences from the subject
• Typical adjustments include sales date, size, age,
condition, location, amenities and key features
Subject property: You may choose four bedrooms or five bedrooms single family property as the subject property of appraisal at a city with active housing market. An active housing market means there are a lot of transactions going on. This property should be a property currently listed for sale. The newly listed subject property should have a time on market (TOM)1 less than 3 months. If a property has been listed on the market for fairly long time without a sale, there may be some hidden problem with the property, or the listed price is not set well. The new listings information could be found in all the major websites for real estate transactions. Do NOT use listing for new construction as your subject property, which is not a good choice for practicing the sales comparison approach.
Selection of Comparables: It is very important to select good comparables. The more similar the comparables relative to the subject property, the less adjustment you do and the more accurate is
1 Time on Market (TOM, alternatively marketing time or days on market) is a measurement of the age of a real estate listing. It is the difference between the listing date of a property and the date of sale (the date of your estimate in this case).
your estimate. You may refer to the file “Zillow Comps” on Titanium for more information of selecting comparables.
Geographically closer is better
Physically similar is better
• Residential within recent 3-6 months
• Time on market – within reasonable range
How many Comps are enough?
3 – 4 is the norm, “any new insights from the next best comp?”
Use of “Listings”
Tends to set an upper limit; Requires adjustment Not accepted under certain circumstances
Same neighborhood or similar neighborhood (zip code, neighborhood level)
Same “market area” – if not enough comparables in the same neighborhood
Size & design, Lot size, Age, etc. Most recent sales better, possible values change w/time
Formatting: The report should be approximately 15-20 pages, double-spaced, 12-point font. Although there are not rigid formatting requirements, please see The Business Writer’s Handbook for helpful formatting suggestions. At minimum, the report must include:
(1) a Title page,
(2) a Table of Contents,
(3) an Executive Summary [a 1⁄2 to 3⁄4 page overall summary of the points raised in the paper],
(4) an Introduction—setting out the material to be examined in the paper,
(5) a Discussion and Analysis section (including the excel table of adjustment), multiple pictures could be displayed within one page for the concern of page limit,
(6) a Conclusions section, and
(7) a Works Cited section, listing all secondary sources consulted in preparing the report.