Using the Sales Approach to Value Your Property

sales-approachReady to Learn How Tax Assessors Use the Sales Approach to Value Your Property?

The Sales Comparison Approach to value is used extensively by fee appraisers. When you get your home financed the bank always requires an unbiased opinion of value so that they know they are not lending more money than the property is worth. For houses especially, the Sales Comparison Approach is seen as the “go to” approach to valuation by appraisers, lenders, Fannie Mae and Freddie Mac.

The Sales Comparison Approach is based on the principle of contribution, that all of the characteristics of land and buildings contribute to the total value. A fee appraiser can estimate the value of full bathroom in a house in a few ways. They can gather evidence from builders regarding the cost to install a full bath in a house that is under construction. They can survey real estate agents to get their impression of what a full bath is worth in a particular market.

In this guide, you will learn:

  • How sales comparison works
  • How sales are used in the mass appraisal system that tax assessors use
  • How the tax assessors use the sales in a neighborhood to appraise all of the properties in the neighborhood

Tax assessors typically start with a cost approach to value and then alter the generated values using the sales from the neighborhood. You should have a basic understanding of how this works!

 

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