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Paired analysis
• Provides market evidence for amount and direction of a particular adjustment
• Pair only two sales for the adjustment and check them against other sales
• Appraiser has to use some judgment “but judgment without market evidence is simply not acceptable appraisal practice.”
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Impact of a paved road; Sale A on paved and Sale B on dirt
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Paired Comparison
• $50 per acre impact from the paved vs dirt road
• Appraiser will keep checking this amount as they find sales that let them make the comparison
• Once one adjustment has been ‘proved’ in the market it can be used for other comparisons
• Assume two similar sales except location and size
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Size Comparison
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Size comparison
• Adjustment is $100 per acre assuming that the adjustment of $50 for location holds
• Next is time adjustment• Remember with time adjustment that the
percentage adjustment is a reflection of compounding too
• Sale two years ago at $1000, next year at $1,100 and this year at $1,200 What’s the percent change due to time?
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Market conditions (time)
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Market conditions (time)• What is the percentage change due to time?– $880 - $950 = -$70• -$70/950 = -7.4%/1.5 = -4.9%
• Sale 1 yr. ago for $600,000• Sale this yr. for $742,000 but property had
$65,500 in improvements
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Comparison• Sale A: 160 Ac. on Hyw. 6, two miles from
Growthville, all Class II soils, no improvements, sold 1 year ago for $1,200, Cash
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Steps• First thing to do is to find a control sale. This
is the sale as similar to the subject property as possible.
• Comparisons will be made to this sale • Assume that we are interested in finding the
market contribution of location using these sales.
• Time adjustments have to be made first• Which is the most like the subject?
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Pairs for Location
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Pairs for Location
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Pairs for Location
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Improved land• Appraisal of improved land starts with
determining the value for each land class through evaluating sales of unimproved land
• These land classes will then be used to determine the value of the land to the sale and the residual will be the value of the improvements
• The value of the improvements will then be allocated among the buildings, etc.
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Value of the land classes• Assume that the appraiser knows that
unimproved sales indicate this division for each land class– Class I 100%– Class II 60%– Class III 40%
• What is the value of each land class if we had a sale for $260,000 with 100 acres of Class I, 200 acres of Class II and 100 acres of Class III.
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Land class example• Class I 100%, Class II 60% and Class III 40%• 100 ac. Class I, 200 ac. Class II, 100 ac. Class III• $260,000 sale price• 100 * 100% = 100• 200 * 60% = 120• 100 * 40% = 40
260$260,000/260 = $1,000 Class I $1,000 * .60 = 600 Class II $1,000 * .40 = 400 Class III