Choosing comparable sales:
I am often asked my process in identifying and choosing comparable sales for use in the sales comparison approach. I am sure my process is similar to yours.
The objective of the Sales Comparison Approach is to formulate an opinion of value based on the recent sales of properties of similar use, size, location influences and other factors that have an influence on value and makes the most direct use of the Principle of Substitution.
First, I identify a define a neighborhood in which the subject property would compete.
Using the multiple listing service, I search to sales within the neighborhood withing approximately 25 percent of above ground square feet, and similar style. Given the slowdown in sales, I typically go back two years.
Using the results from the search, if there are enough sales, I focus on recent sales, location, similar in size, actual age, effective age and condition.
Due to lack of data, sometimes dated sales or distant comparable sales are necessary.