The three approaches
Sales comparison: the method that carries most condemnation appraisals
Find sales of similar property, adjust for the differences, and conclude a value. Its strength is that it rests on what buyers actually paid. Its weakness is that the adjustments can quietly become the whole analysis.
Method
How the approach is applied
Select comparable sales
Properties similar in location, size, zoning, use and date. In condemnation, sales influenced by the project itself are generally excluded.
Verify each sale
Confirm price, terms, conditions and motivation with a party to the transaction. An unverified sale from a public record may not be an arm\u2019s length transaction at all.
Adjust for differences
Each comparable is adjusted up or down for time, location, size, access, zoning, services and condition, to express what it would have sold for if it matched the subject.
Reconcile to a value
Weight the adjusted figures by how comparable each sale is. The least adjusted sale is usually the most informative.
Where it goes wrong
When the adjustments outgrow the evidence
Each adjustment is a judgement. A ten percent uplift for superior access, a fifteen percent reduction for size, an eight percent allowance for the passage of time. Individually they are reasonable. Together they can amount to more than half the original sale price, at which point the conclusion reflects the appraiser\u2019s judgement rather than the market\u2019s behaviour.
There is no fixed threshold, but a practical rule is useful: when gross adjustments exceed roughly a quarter of the sale price, the comparable is weak, and when they exceed half, it is barely evidence at all. A report resting on three heavily adjusted sales deserves more scrutiny than one resting on two lightly adjusted ones.
Two questions worth asking of any adjustment grid. What is the support for each adjustment, beyond the appraiser\u2019s experience? And were any sales rejected that would have supported a higher value, and on what basis?
Checking the grid
What to look for in the comparable sales table
| Feature | What to check |
|---|---|
| Number of sales | Three is a minimum; fewer suggests the search was narrow |
| Dates | All substantially before the valuation date, with a supported time adjustment |
| Location | Genuinely competing locations, not simply nearby ones |
| Project influence | Sales to the agency itself, or sales after the project was announced, are suspect |
| Gross adjustment | The total of all adjustments as a percentage of the sale price |
| Rejected sales | Whether higher sales were considered and why they were set aside |
Questions about comparables
The appraiser used sales from two years ago. Is that acceptable
It can be, with a supported adjustment for market movement. The support is the issue: a time adjustment should rest on evidence of what the market did, not on a general sense that prices rose.
Can sales to the condemning agency be used as comparables
Generally not. They are made under the shadow of compulsion and often at the agency\u2019s own appraised figure, so they are circular evidence of value.
My property is unusual and nothing is comparable
Then the sales comparison approach is weak and the cost or income approach may carry more weight. A report should say so rather than force comparables that do not fit.
Get a valuation question answered
If an offer has arrived and the number does not match what you believe the property is worth, the appraisal behind it is the place to look. Start with the pages below.