The appraiser selects recently sold comparable properties and makes adjustments to account for differences between each comparable and the subject property. Adjustments are always made to the comparable, never to the subject. If a comparable has a feature the subject lacks, the value is subtracted; if the subject has a feature the comparable lacks, the value is added. Ideally, comparables should have sold within the past six months.
If the subject property has 3 bedrooms and a comparable that sold for $300,000 has 4 bedrooms, the appraiser would subtract the value of the extra bedroom (say $15,000) from the comparable's price, adjusting it to $285,000.
Always remember: adjust the comparable, not the subject. Use the mnemonic CBS—Comparable Better, Subtract. If the comparable is better than the subject, subtract from the comparable's price. If the comparable is inferior, add to its price.
Related Terms
Related Concepts
A transfer tax is a tax imposed on the transfer of ownership of real estate.
Various programs and exemptions exist to reduce the property tax burden for specific groups, such as seniors, homesteaders, or veterans.
Depreciation is an accounting method of allocating the cost of an asset over its useful life, allowing investors to deduct a portion of the asset's cost each year.
Many states have laws to limit how much property taxes can increase each year, regardless of market value fluctuations.
Homestead portability allows homeowners to transfer a portion of their accumulated homestead tax savings to a new homestead in the same state.
Frequently Asked Questions
Study This in Your State
Comparable Sales Approach may have state-specific rules. Choose your state to study Valuation with localized content: