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SALES COMPARISON APPROACH <br />The Sales Comparison Approach to Value is predicated upon sales of properties with similar <br />characteristics as the subject. The primary premise of this approach is that the market value <br />of the subject is directly related to the prices of competing properties after adjustment. <br />Adjustments are made to competing properties for significant differences. <br />Supply and Demand: Sales in the market result from negotiations between buyers and <br />sellers. Buyers reflect market demand and sellers supply. If demand is high, prices tend to <br />increase, if it is low, prices usually decrease. Demand for properties like the subject in recent <br />years has been average. <br />Substitution: The principle of substitution holds that the value of a property tends to be set <br />by the price paid to acquire a substitute property of similar utility and desirability within a <br />reasonable amount of time (The Appraisal of Real Estate, 12th Edition). The sales <br />comparison approach is less reliable if substitute properties are not available in the market. <br />Sales are available. <br />Balance: The market tends to force a balance between supply and demand. Balance can <br />change due to shifts in population, variations in purchasing power, consumer tastes and <br />preference, and time. <br />Externalities: When possible, select comparables with similar location, economic conditions <br />and support facilities. <br />The Following Outline Is Used In The Sales Comparison Approach: <br />- A location map of the comparable sales. <br />- Comparable sales are listed. <br />- An adjustment grid using the comparable sales. <br />- A discussion of adjustment and conclusion of value. <br />Nagell Appraisal & Consulting ~ 952-544-8966 (www.callnagell.com ~ g <br />