Comparison (or comps ) is a real estate valuation term referring to properties with characteristics similar to the subject property whose value is being searched. This can be done either by a real estate agent that tries to establish the value of the home or property of a potential client through a market analysis or, by a licensed or certified appraiser or surveyor using a more defined method, while performing a real estate assessment.
Video Comparables
Faktor
Five factors are usually considered when determining comparisons:
- Terms of Sale - What's comparable recently transacted under conditions (eg - arm length, distress sales, property settlement) consistent with the standard values ​​at which the rating is being made?
- Financing Conditions - Are comparable transactions affected by non-markets or other lucrative (or even unprofitable) financing terms? For example, if compared to being sold at the below-market interest rate provided by the seller, and if the value standard (eg - market value) assumes no such abnormal financing, then the appraiser may need to adjust the price equal to the amount equal to the estimated impact of favorable financing.
- Market Conditions - These are often referred to as time adjustments and accounts to change prices over time.
- Comparative Location - Are comparable and subject properties affected by the same locational characteristics? For example, even two houses in the same neighborhood may have different views that cause a person to be more valuable than others.
- Physical Compability - This includes factors such as size, condition, quality, and age.
Maps Comparables
Use in scoring
Real estate appraisal is like any other statistical sampling process. The comparison is a sample taken and measured, and the result is an approximate value - called "value opinion" in the terminology of a real estate appraisal. In most statistical sampling processes, one of the best best predictors is searched. However, since the real estate market is known to be extremely inefficient, and the market transaction data is experiencing significant errors, the valuation process generally depends on several simultaneous approaches to value, with a judgmental reconciliation as the final step to reaching the appraisal opinion. Thus, comparable data is used in all assessment approaches.
Cost approach
This approach estimates the cost of construction improvements, as if new, and reduces the factors of depreciation, disutility, and external obsolescence. For this added site value and site improvements. The result is a value through a cost approach. Comparable data is used to estimate the value of the site, and may also be useful in estimating construction costs and other factors. However, in practice, most appraisers use standard pricing services for cost estimates and use the age-age method for depreciation.
The cost approach has historically been prepared as part of most valuations of commercial real estate. However, inclusion to include a cost approach (when it is irrelevant) has been lost for the last 20 years.
The substitution principle is the technical basis for using the cost approach. According to the principle of substitution, a wise buyer will not pay more than the cost of building a similar property. In other words, a person will not spend $ 2,000,000 to buy a new apartment complex if they can build it for 1,500,000.
The value of the cost approach is the sum of the market value of the land, the depreciated replacement cost and the entrepreneurial effort. Land is usually assessed using a sales comparison approach. The cost of replacement is the cost to build a building of the same quality and functional utility as the subject property. (The cost of reproduction is the cost of building the right duplicate.This approach is used occasionally for old buildings built using materials and or workmanship that is not currently used.)
External obsolescence occurs when circumstances beyond the boundaries of the subject property have a negative impact on its value. For example, an office building in New York will experience external obsolescence if the occupancy of Manhattan offices drops from 93% to 75%. A house built next to a slaughterhouse is another example of external obsolescence.
An entrepreneurial advantage is the amount of compensation needed to persuade a person to manage the sites, investors, debt, architecture, constructions and rentals required to plan and build the property. The right amount of entrepreneurial profit depends on factors such as competition, project difficulty, market conditions and developer plan policies. In some cases, external or functional obsolescence impedes entrepreneurial profits.
The following is a summary of the cost approach:
Market Value of Land Replacement of new repair costs - All forms of depreciation Entrepreneurial Income = Market Value through Cost Approach
Sales comparison approach
This is the approach most often associated with the use of comparisons. Valuers seek enough comparators (at least three in housing analysis, many more in non-residential valuations) and make adjustments to comparable selling prices according to various comparative factors. For example, if the residence is 1,000 square feet (93 m 2 ), but the equivalent is 1,100, then the comparable selling price will be adjusted down to account for this value difference. Downward adjustments may be very small, since marginal rates of comparable factors are usually much lower than the average price above the small value range.
Income approach
This approach relies on discounted or capitalized estimates of future cash flows. Often, future cash flows should be estimated using comparable income-generating properties. Discount rates and capitalization rates are often estimated using the latest sales of comparable properties, with appropriate adjustments to account for differential risk between comparable and subject.
Custom situations
Valuers are often asked to estimate the impact of certain factors, such as contamination, ease, or construction defects. Valuers who specialize in such jobs typically maintain a database of comparable transactions, case studies, or academic studies that can be used as a basis for adjustment.
Complete check
Comparable articles can also be used when performing a "Comp Check", which is a slang term referring to a simple analysis, usually done by a real estate agent or broker, to estimate the potential range of price or selling point. It is important to note that real estate valuations are usually conducted in accordance with a set of standards, most common in the US Uniform Standards of Professional Practice Assessment , or USPAP for the short term. There are also tools that can help home buyers or sellers estimate the value of their real estate properties, but for a complete and comprehensive analysis of their properties, potential clients must always rely on licensed or certified assessment assessors.
References
Source of the article : Wikipedia
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