Sales Comparison Approach
What the exam tests
Sales comparison questions test comparable selection, the order of adjustments, paired-sales support, and reconciliation. Residential assignments rely heavily on this approach.
Core rules
- Apply the elements of comparison in sequence: property rights, financing, conditions of sale, expenditures after purchase, market conditions, location, physical characteristics, and use/zoning.
- Adjust the comparable to the subject. If the comparable is superior, subtract; if inferior, add.
- Use paired sales, grouped data, or cost/income support for adjustments. Net adjustments are not a reliability test by themselves; gross adjustments and the number of adjustments matter.
- Bracketing surrounds the subject with comparables that are superior and inferior on a characteristic.
Worked example
Subject: 2,000 sq ft, two-car garage. Comp A: 2,200 sq ft, two-car garage, sold $420,000. GLA adjustment is $80/sq ft. Comp A is 200 sq ft larger, so subtract $16,000 => $404,000. Comp B: 1,900 sq ft, one-car garage, sold $375,000. Add $8,000 for 100 sq ft GLA => $383,000; add $10,000 for the second garage bay => $393,000. After other adjustments, reconcile within a supported range rather than averaging blindly.
Traps
Adjusting the subject to the comparable; double-counting a feature; making an unsupported dollar adjustment; using a sale with non-market financing; treating the adjusted range as a value by simple average.