I wrote last week about finding good comparables. I want to write a little about using the comparables to find the value of the property.
Once you have received “good” comparables you need to find the value so you can determine what your subject property is worth.
To find the value we will assume you have found three “good” comparables. Once you have these comparables one of the most common ways to find the value is to figure the cost per square foot for each of the comparables you have.
Finding the price per square foot is as easy as taking the sales price of the comparable and dividing that by the square footage of the comparable.
- Here is an example: $150,000 sales price / 1600 sqft = $93.75 per sqft.
Once you have the price per square foot for each of the comparables you will find the average. Let’s say that the average price per square foot is $91.18 and let’s assume the subject property we are looking at is 1550 sqft.
Knowing the square footage and price per square foot for the subject property we can times this out to get a market value for the property.
- Here is an example: $91.18 x 1550 sqft = $141,329 market value.
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