Sales and Comparables: What's the difference?
What exactly is the difference between a sale and a comparable? They are both properties that have sold recently, in a similar market area so does that mean that any or every sale can be a comparable? Not really. Sounds confusing? Not really.
In a healthy market there are plenty of SALES every month that can range from a few thousand dollars to several million dollars. In our market here in New Orleans, we may have both ends of that pricing spectrum in the same area. It is the appraisers job to research the market sales and narrow the field to include only SALES that meet certain criteria and can then be considered COMPARABLE to the property being appraised.
A COMPARABLE is a property that the “market” or typical buyer would consider similar to the the property being appraised. They have similarities when it comes to style, age, quality, condition, appeal, square footage, time of sale, proximity to schools and employment, and utility. A true COMPARABLE would be seen as a logical substitute or competitor if the property being appraised were listed for sale at the same time. It is unlikely that a buyer considering a 1200 square foot creole cottage in the Irish Channel with no off-street parking would also consider a 2000 square foot Victorian in the Lower Garden District. As appraisers we must always try to compare apples to apples. One factor that is never considered when choosing comparables is price.
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