Market

Market

Before you compare a single sale, read the market, and the subject's own story. This is Module 10, in under four minutes. Five sections: Highest and Best Use, Market, Subject Listing Information, Sales Contract, and Prior Sale and Transfer History.

Four tests, one answer

Highest and Best Use always displays, and it's built from plain Yes or No answers. Is the present use legally permissible, physically possible, financially feasible, and maximally productive? Then the final question: is the present or proposed use the highest and best use? Any No requires commentary with the evidence behind it.

Define the market first

The Market section always displays, and opens with two required descriptions. Market Area Boundary describes the geography: streets, waterways, county lines. Search Criteria Description spells out how you searched for competing properties. A boundary map or a screenshot of your search can go in Market Exhibits.

Count only what competes

Every metric counts only properties that directly compete with the subject. Active Listings shows median days on market and the list price range. With zero listings, those rows drop off. Pending Sales is a separate count. Neither one includes the other. For sales, you set the lookback in months, then report the count and the sale price range. Distressed Market Competition is Yes only when REO, foreclosure, or short sale activity actually impacts the market.

Show the trend

Five graph types can support your analysis, from Absorption Rate to Price Trend. The graphs display in Market Exhibits. Price Trend Source is always required. With no Price Trend graph, you must explain how you determined the trend in commentary. Housing Trends adds Demand/Supply, and Marketing Time for competing properties.

The subject's listing history

Subject Listing Information always displays, looking back at least one year. Each relevant listing gets a row: status, type, dates, days on market, and list prices. A listing that never hit the open market, like a for sale by owner, shows zero days. Same-day contract shows one. No listings? It shows None, plus your data sources. And a listing that sold belongs in transfer history instead.

Only when there's a contract

The Sales Contract section only appears when there's an active contract. Was the contract analyzed? If not, explain why, your source, and your efforts to get it. Not arm's length? Describe how the parties are related. Then price, date, and the one most applicable transfer term. If personal property conveys, the report notes it's not in your value. Last, concessions: are there any, is the amount known, and are they typical for the market?

Three years back, and one

Prior Sale and Transfer History always displays. For the subject, report prior sales and transfers in the three years before the effective date, not the current sale. For a settled comp, look back twelve months from its sale date. For an active, pending, or off-market comp, from the effective date. No transfers? It shows None, with your data sources.

Five things to remember

Quick recap. One. Four Yes or No tests, and any No needs commentary. Two. Define the market, then count only what competes. Three. No Price Trend graph means you write the commentary. Four. Sales Contract appears only with an active contract. Five. Listings look back a year, subject transfers three, comps twelve months. Next up: the Sales Comparison Approach.