Sales Comparison Approach
This domain tests whether you can select truly comparable evidence and adjust it transparently. The examiner rewards a clear unit of comparison, verified transactions, and adjustments that are explained rather than guessed.
Core rules
- Prefer recent, arm's-length, verified sales of similar properties in the same market segment.
- Adjust the comparable to the subject, not the subject to the comparable.
- Typical adjustments: market conditions, location, size, condition, quality, parking, tenure, lease profile, financing, and conditions of sale.
- Use a consistent unit: price per sqm, per unit, per room, or per hectare. Do not mix units without conversion.
- Reconcile the adjusted indications and explain the weighting; do not simply average.
Worked example
Subject: 200 sqm retail unit. Comparable: 180 sqm sold six months ago for 360,000, or 2,000/sqm. Market has risen 5%; the comparable has a superior location (adjust -10%) and superior condition (adjust -5%). Adjusted rate = 2,000 x 1.05 x 0.90 x 0.95 = 1,795.50/sqm. Indicated subject value = 1,795.50 x 200 = 359,100. Each adjustment is applied once and explained.
Traps
- Using asking prices or unverified sales.
- Adjusting the subject instead of the comparable.
- Double-counting the same factor, such as time and market conditions.
- Mixing gross and net adjustments without a logical sequence.
- Ignoring lease or tenure differences.