Comparable evidence is not a list of nearby prices. It is analysed data, adjusted for differences that a purchaser would actually price.
Comparison is the most widely used valuation approach and the most frequently misapplied. A schedule of transactions in the vicinity is raw material; the valuation work lies in selection, verification and adjustment.
Selection and verification
Transactions vary in reliability. Related-party transfers, forced sales, transactions with unusual terms, and prices reported without incentives may all mislead. Verification of terms matters as much as the headline figure.
Adjustment
- Date of transaction relative to the valuation date
- Location and micro-location differences
- Size, configuration and unit-level attributes
- Tenure, title restrictions and encumbrances
- Condition, age and capital expenditure requirement
- Terms of sale, including incentives and rebates
Adjustments should be reasoned and, where possible, evidenced by the market itself. Unexplained adjustments are the weakest point of many valuation reports and the first place a reviewer will look.
Information on this website is general in nature and does not constitute a formal valuation, appraisal or professional advice. A valuation conclusion arises only from a professional engagement with an agreed scope of work.