This portion of the appraisal process involves the direct comparison of the property being appraised to similar properties that have sold in the same or similar markets in recent years, in order to arrive at an indication of value for the subject property.
Among the basic real estate principles reflected in this approach is the principle of substitution, which states, in part, that the value of the property replaceable in the market tends to be set by the cost of acquiring an equally desirable substitute property, assuming that no costly delay is encountered in making the substitution.
The application of this approach involves market research to obtain recent sales of properties as similar as possible to the subject. The sale prices of those properties deemed most comparable tend to set the range in which the value of the subject property will fall. Differences between the subject and the comparables are analyzed and adjusted for based upon market reaction to the different feature which would typically include such things as location, soil quality, land area, topography and financing.
The relevance and overall reliability of this technique is enhanced when:
I have reviewed and analyzed numerous recent sales, with an effort made to search out sales of properties in generally close proximity to the subject having a similarity of highest and best use. A common unit of comparison for buyers of residential development property in this market area is price paid per square foot of land area.
On the following pages is a presentation of the comparable sales which I believe possesses the highest degree of overall similarity to the subject property, and therefore provides a reliable indication of the market value. The appraiser has conducted extensive research to ascertain the most recent transactions of properties having a similarity of highest and best use. I have also interviewed Realtor's active in the market area, considered sales from RMLS.