Price Adjustments of Price-setting Factors under Sales Comparison Approach (SCA)
Main Article Content
Abstract
The sales comparison approach (SCA) usually represents the most important valuation approach. Besides this approach, there are two other performing valuation approaches at other bases. The sales comparison is a set of procedures, in which an appraiser derives a value indication by comparing the property being appraised to similar properties. Real properties vary considerably from one another, which is reflected by price-setting factors. Although price adjustments (caused by differences projected into price by the grid adjustment technique) are always ad hoc, certain relations among the price-setting factors can be detected.
The research is based on evaluating price adjustments across different types of real estate. In addition, its objective is to determine the values of simultaneous relations of price adjustments for individual price-setting factors. The methodology consists of three steps. The first one clearly defines the content of individual price-setting factors and price adjustments for further analysis. The second step involves statistical analysis of an extensive appraiser database and evaluation of price adjustments. The final step uses selected statistics to compare the LRM and the SCA and interprets mutual relations.
The results of the research should have practical implications for professional appraisal community and further research analyses of the SCA.
Keywords: Sales comparison approach, price-setting factor, price adjustment, real estate;
Downloads
Article Details
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).
References
Cupal, M. (2010). Bid prices and market prices relation of real estate modelling. Journal of International Scientific Publications: Economy & Business, 4, 213-220.
Cupal, M. (2014). The Comparative Approach theory for real estate valuation. Procedia - Social and Behavioral Sciences, 109, 19-23.
Cupal, M. (2015). Flood Risk as a Price-setting Factor in The Market Value of Real Property. Procedia Economics and Finance. 23, 658-664.
Cupal, M. (2015). Historical Perspective of Residential Development and its Impact on the Current Market Prices of Apartments on the Czech Real Estate Market. Procedia Economics and Finance, 26, 144-151.
Isakson, H. R. (2002). The linear algebra of the sales comparison approach. Journal of real estate research (JRER), 24(2), 117-128.
Manaster, M. S. (1991). Sales Comparison Approach: A Comparative Analysis of Three Appraisal Reports on the Same Property. The Real Estate Appraiser, 5, 12–26.
Rhodes, G. (2014). Qualitative analyses in the sales comparison approach revisited. The Appraisal Journal, Fall 2014 issue, 281-294.
Shapiro, E., Mackmin, D., Sams, G. (2012). Modern methods of valuation. Estates Gazette, 11 edition, Oxford.
The International Valuation Standards Committee – IVSC. (2011). The International Valuation Standards IVS 2011, London.
The European Group of Valuer’s Associations – Tegova. (2012) The European Valuation Standards 2012, seventh edition.