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Using Comparable Sales To Determine The Current Market Value Of A Property

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					When assessing the value of a property, many investors and other commercial
property buyers look at comparable sales to determine the true current market value of
a property. The comparable sales can show you exactly what properties are selling for,
not just the asking price. If you know three or four properties of similar characteristics
sold for about the same amount, then you can determine what the value of your
property is. Don't ever just look at the asking price, as it can be as far off as the owner
wishes. He or she may be dreaming in regards to what the property is really worth!
 Comparable sales, or comps, are the properties that have sold around the subject
property that are zoned identically, and are about the same amount of acreage. It also
helps if the comparable sales are from properties that have similar uses.
 Comparable sales may not always be the most accurate for your specific property.
They could be from many years ago, may not be of similar use, many not have the
same characteristics such as the availability of utilities, or may not have a comparable
amount of road frontage, or could be a considerable distance from the subject
property.
 In order to get around this problem, you must use the closest properties that you can.
You simply adjust the price according to the changes in the market or property
characteristics.
 For example, if a comparable sale was from 2001, and the current year is 2006, then
you can adjust the price according to the appreciation the overall commercial market
has experienced in a specific area.
 Or, if the subject property has a total road frontage of 200 feet, and the comparable
sale property has frontage of 1000 feet, you can adjust the price or value
appropriately.
 As you can see, finding the true current market value of a property can take some
investigation and adjustment in relation to the properties that have sold in the past.
The more recent and similar the comparable sale is, the easier and more accurately
you can assess the true value of the property.
 It is a good idea to collect as many comparable sales as possible and take inventory
of each. What are the characteristics? What are the uses? Assess each one individually
and then group them together to determine an overall consensus. You should be able
to determine the current market value at this point. The more properties you have to
pool from, the more accurate a number you will have.
 Very often brokers or agents supply you with comps from the area of interest as part
of the service of selling the subject property. If you are not familiar with the area, you
must be leery of the comps that they send you.
 I have received comps of properties in the most affluent areas for a subject property
that was positioned in a lower to medium class area which completely misrepresented
the true market value of the property. Unless I had investigated further and asked
many questions, I could have easily taken this property as a true comparable sale, and
would have expected a far greater return than what I really would have experienced.
 Unfortunately, as much as you want to trust the information that you are given by a
source, you must always perform your very own investigation because brokers and
agents are there to sell their properties. Many of them are honest and will do the best
they can to give you the most accurate information. However, there are those who will
dupe a buyer in order to sell the property and receive their commission. It is important
to be aware of these tactics. Although we don't like to admit that they happen, they
most certainly do.
 Comparable sales are really the only way you can determine the true value of a
property. It may take a comparable from another city, or even county of identical
characteristics to determine the most accurate value. If necessary, ask a trustworthy
broker or agent for assistance, as they will know their market inside and out, and be
able to point you in the right direction as to what the property is really worth. Get two
or three opinions in order to validate any information you might receive.
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