Paired Sales Analysis
A technique used to estimate the value contribution of a specific property feature by comparing two sales that are identical except for that one feature. The difference in sale prices indicates the market value of the feature.
Paired sales analysis (also called matched pairs) is the most direct method of extracting adjustments from the market. For example, to determine the value of a garage, an appraiser finds two otherwise identical sales — one with a garage and one without — and attributes the price difference to the garage. In practice, perfectly matched pairs are rare, so appraisers often use multiple pairs and supplementary analysis to develop reliable adjustment figures. This technique is preferred by USPAP and GSEs over unsupported "rule of thumb" adjustments.
Related Terms
Adjustment
A dollar or percentage modification applied to a comparable sale's price to account for differences between the comparable and the subject property.
Comparable Sale
A recently sold property that is similar to the subject property in terms of location, size, condition, and features, used as evidence to support the appraiser's opinion of value in the sales comparison approach..
Sales Comparison Approach
A valuation method that estimates a property's value by comparing it to similar properties that have recently sold in the same market area.
Market Extraction
A method of deriving capitalization rates, depreciation rates, or adjustment values directly from analysis of comparable market transactions rather than from theoretical formulas or published sources..
More in Valuation Approaches
View allCost Approach
A valuation method that estimates value by calculating the cost to reproduce or replace the improvements, subtracting accrued depreciation, and adding the land value.
Income Approach
A valuation method that estimates a property's value based on the income it generates or is expected to generate.
Market Value
The most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus..
Reconciliation
The process by which an appraiser evaluates and weighs the results from the different valuation approaches (sales comparison, cost, and income) to arrive at a final opinion of value..