More advance version
ELEMENTS OF COMPARISON
It is unlikely that the appraiser will find sales data so closely comparable to the subject property
that no adjustments will be required. The types of differences for which adjustments are often
required are referred to as elements of comparison. Elements of comparison, which are
enumerated in section 402.5 (above) and also in Rule 4, are the important factors that should be
separately considered and adjusted for, if necessary, when analyzing comparable properties.36
Rule 4 provides that when using the sales prices of the appraisal subject or of comparable
properties in valuation, the assessor shall:
(a) Convert a non-cash sale price to its cash equivalent by estimating the value in
cash of any tangible or intangible property other than cash which the seller
accepted in full or partial payment for the subject property and adding it to the
cash portion of the sale price and by deducting from the nominal sale price any
amount which the seller paid in lieu of interest to a lender who supplied the
grantee with part or all of the purchase money.
(b) When appraising an unencumbered fee interest, (1) convert the sale price of a
property encumbered with a debt to which the property remained subject to its
unencumbered fee price equivalent by adding to the sale price of the seller’s
equity the price for which it is estimated that such debt could have been sold
under value indicative conditions at the time the sale price was negotiated and (2)
convert the sale price of a property encumbered with a lease to which the property
remained subject to its unencumbered fee price equivalent by deducting from the
sale price of the seller’s equity the amount by which it is estimated that the lease
enhanced that price or adding to the price of the seller’s equity the amount by
which it is estimated that the lease depressed that price.
(c) Convert a sale to the valuation date of the subject property by adjusting it for
any change in price level of this type of property that has occurred between the
time the sale price was negotiated and the valuation date of the subject property.
(d) Make such allowances as he deems appropriate for differences between a
comparable property at the time of sale and the subject property on the valuation
date, in physical attributes of the properties, location of the properties, legally
enforceable restrictions on the properties’ use, and the income and amenities
which the properties are expected to produce. When the appraisal subject is land
and the comparable property is land of smaller dimensions, and it is assumed that
the subject property would be divided into comparable smaller parcels by a
purchaser, the assessor shall allow for the cost of subdivision, for the area
required for streets and alleys, for selling expenses, for normal profit, and for
interest charges during the period over which it is anticipated that the smaller
properties will be marketed.
Elements of comparison that must be considered by the appraiser are summarized as follows:
1. Property rights and interests conveyed;
2. Cash equivalence;
3. Non-real property items included in the sale, such as tangible personal property (e.g.,
equipment and furnishings) and non-taxable intangible assets and rights;
4. Market conditions;
5. Highest and best use and legally enforceable restrictions; and,
6. Location and physical and economic characteristics.
