Evaluating Property Valuation Techniques | Thương mại điện tử | Đại học Tôn Đức Thắng

PRACTICE CASE STUDY 1
Assume transaction data from three comparable properties are used in valuing the subject property—
a single-family home located at 1420 Oakwood Lane in the Greenwood Estates neighborhood.
Sarah Connor has signed a contract to purchase the home from Michael Johnson for $1,350,000. Ms.
Connor has applied for a $1,280,000 mortgage loan from Bank of America. The comparable
properties are located in the subject property’s neighborhood.
In these neighborhoods, the sale prices of Comparable 1, 2, and 3 are approximately $1,400,000,
$1,750,000, and $1,600,000, respectively. Two of these properties sold within the last three months,
while the third sold five months ago. Based on recent market appreciation, property values have increased by 0.4% per month.
The property rights conveyed are fee simple absolute. The acquisition will be financed with a
conventional mortgage, and it appears to be an arm’s-length transaction. Conditional Terms:
Comparable 1: The buyer can pay in 2 installments: 60% upfront and 40% after ✓ one year.
Comparable 2: The buyer can pay in 2 installments: 40% upfront and 60% after ✓ two years.
Comparable 3: The buyer can pay in four equal installments over four years. ✓
The buyer of Comparable 2 is required to replace the electrical system immediately upon purchase, at a cost of $6,000.
The subject property is located in Greenwood, as is Comparable 1. However, Comparable 2 is in
Westwood, and Comparable 3 is in Maple Ridge. Both Westwood and Maple Ridge are generally
considered more desirable, with homes selling at a 5% price premium relative to similar homes in Greenwood.
In these neighborhoods, each additional square foot of lot size or living area is valued at $22 per
square foot and $85 per square foot, respectively. Each additional year of effective age decreases
property values by $2,700. Additional bathrooms are valued at $1,200 each, while garage spaces,
wood decks, and pools are worth $9,000, $1,500, and $13,000, respectively. Nonrealty items:
In Comparable 2, a sofa is included, valued at $800. ✓
In Comparable 3, two air-conditioners are included, valued at ✓ $900 each. Comparison Subject Property 1 Property 2 Property 3 Factors Property Sale Price - $1,400,000 $1,750,000 $1,600,000 Pay
60% upfront, 40% 40% upfront, 60% after 4 equal installments
Payment Terms immediately after 1 year 2 years over 4 years Electrical system Repair Costs None None None replacement: $6,000 Location Greenwood Greenwood Westwood (+5%) Maple Ridge (+5%) Lot Size (sqft) 7,000 7,200 6,800 7,100 Age (years) 6 8 7 9 Living Area 3,800 3,950 4,000 3,900 (sqft) Number of 3 2.5 3.5 2 Bathrooms Garage Spaces 2 1 2 1 Porch, Pool None Porch None Pool Non-Realty 2 air conditioners None None Sofa set ($800) Items ($900 each)
Calculate the adjusted values and determine the value of the subject property with a discount rate of 9%. PRACTICE CASE STUDY 2
Assume transaction data from three comparable properties are used in valuing the subject property—
a single-family home located at 3245 Pinecrest Avenue.
Emily Watson has signed a contract to purchase the home from John Smith for $1,475,000. Ms.
Watson has applied for a $1,400,000 mortgage loan from Citibank. The comparable properties are
located within the same general area.
The sale prices of Comparable 1, 2, and 3 are approximately $1,520,000, $1,870,000, and
$1,620,000, respectively. Two of these properties sold within the last two months, while the third
sold five months ago. Based on recent market appreciation, property values have increased by 0.35% per month.
The property rights conveyed are fee simple absolute. The acquisition will be financed with a
conventional mortgage, and it appears to be an arm’s-length transaction. Conditional Terms:
Comparable 1: The buyer will pay immediately. ✓
Comparable 2: The buyer will pay in 2 installments: 50% upfront and 50% after one year. ✓
Comparable 3: The buyer will pay in three equal installments over three ✓ years.
The buyer of Comparable 2 is required to repair the plumbing system immediately upon purchase, at a cost of $5,500.
The subject property is located in Pinecrest, as is Comparable 1. However, Comparable 2 is in
Willowbrook, and Comparable 3 is in Lakeview. Both Willowbrook and Lakeview are considered
more desirable, with homes selling at a 4.5% price premium compared to similar homes in Pinecrest.
In these neighborhoods, each additional square foot of lot size or living area is valued at $21 per
square foot and $82 per square foot, respectively. Each additional year of effective age decreases
property values by $2,800. Additional bathrooms are valued at $1,100 each, while garage spaces,
wood decks, and pools are worth $8,500, $1,200, and $11,500, respectively. Nonrealty items:
In Comparable 2, a dining set is included, valued at $850. ✓
In Comparable 3, three ceiling fans are included, valued at $700 each. ✓ Comparison Subject Property 1 Property 2 Property 3 Factors Property Sale Price - $1,520,000 $1,870,000 $1,620,000 Pay Pay
50% upfront, 50% after 3 installments over 3 Payment Terms immediately immediately 1 year years Repair Costs None None Plumbing repair: $5,500 None Location Pinecrest Pinecrest Willowbrook (+4.5%) Lakeview (+4.5%) Lot Size (sqft) 6,900 7,100 6,750 6,800 Age (years) 7 6 8 10
Living Area (sqft) 3,700 3,850 3,900 3,750 Number of 3 3.5 2.5 3 Bathrooms Garage Spaces 2 2 1 2 Porch, Pool None Porch Pool None 3 ceiling fans ($700 Non-Realty Items None None Dining set ($850) each)
Calculate the adjusted values and determine the value of the subject property with a discount rate of 9.5%.