property valuations

Property Valuation: Direct Comparison
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Property Valuation: Direct Comparison
Property can be evaluated using various methods. Each method has its assumptions and rationale as to why the particular method has been chosen in any given situation. Given the information provided in the relation to the three sales, the best method to determine the value of the other prices are the direct comparison approach and in particular the sales comparison approach. According to this method, the comparison is made between the properties under investigation and properties with similar features that have been sold previously (API, 2015). In this case, the property valued is based on the adjustments made to the properties in relation to the other properties previously sold. The general rationale of using the method is that any potential investor will not pay more for a property that has similar features than the one sold previously (Koropi, 2016).
As far as the assumptions are made, one of the assumptions is in relation to the cost involved. It is assumed that the costs involved in the construction of the previous units are the same as the cost involved in the construction of the current units. An illustration is in the information provided pertaining sale 1 and sale 2. The additional cost for the construction of one additional room is $ 25000. With this in mind, it is assumed that the construction of one bedroom is done as a cost of $ 25000. This cost …