85:, both comparison techniques can become unreliable if the time interval between transactions sampled is excessive. The other factor undermining a simplistic use of the SCA is the evolving nature of city neighborhoods, though in reality urban evolution occurs gradually enough to minimize its impact on this approach to value.
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More advanced researchers and appraisers commonly employ statistical techniques based on multiple regression methods which generally compare a larger number of more geographically dispersed property transactions to determine the significance and magnitude of the impact of different attributes on
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and real estate appraisers is the sales adjustment grid. It uses a small number of recently sold properties in the immediate vicinity of the subject property to estimate the value of its attributes. Adjustments to the comparables may be determined by trend analysis, matched-pairs analysis, or
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valuation method that relies on the assumption that a matrix of attributes or significant features of a property drive its value. For examples, in the case of a single family residence, such attributes might be floor area, views, location, number of bathrooms, lot size, age of the property and
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In more complex situations, such as litigation or contaminated property appraisal, appraisers develop SCA adjustments using widely accepted advanced techniques, such as repeat sales models (to measure house price appreciation over time), survey research (e.g. --
53:. Supply and demand indicates value through typical market behavior of both buyers and sellers. Substitution indicates that a purchaser would not purchase an improved property for any value higher than it could be replaced for on a site with equivalent
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property value. Research has shown that the sales adjustment grid and the multiple regression model are theoretically the same, with the former applying more heuristic methods and the latter using statistical techniques.
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Spatial auto regression plagues these statistical techniques, since high priced properties tend to cluster together and therefore one property price is not independent of its neighbor. Given
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148:, by The Appraisal Foundation, updated and published annually through the 2006 edition; henceforth, updated editions are to appear biannually.
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condition of property. This method is in contrast to the two other main pricing methods for real estate which are
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see, for example, Kilpatrick, Throupe, Mundy, & Spiess, Valuation of
Impaired Property,
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142:, by the Appraisal Institute is an industry-recognized textbook.
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The sales comparison approach is based upon the principles of
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The
Uniform Standards of Professional Appraisal Practice
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65:In practice, the most common SCA method used by
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188:When Bad Things Happen to Good Property
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173:see, for example, Lentz and Wang,
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175:Journal of Real Estate Research
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153:Sales Comparison Approach
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118:German income approach
207:Real estate valuation
103:Real estate appraisal
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128:Real estate business
91:contingent valuation
61:Examples of Methods
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