How can you easily find and analyze comparable sales data?

1 Use reliable sources

The first step to finding and analyzing comps is to use reliable sources of data. You can use public records, such as county assessor websites, to find sales data for properties in your area. However, public records may not have the most updated or accurate information, and they may not include all the relevant details of the transactions, such as financing terms, concessions, or improvements. A better option is to use commercial real estate databases, such as CoStar, LoopNet, or CREXi, that collect and verify sales data from multiple sources, such as brokers, owners, and appraisers. These databases also allow you to filter and sort the data by location, property type, size, age, condition, and other criteria.

2 Compare apples to apples

The second step to finding and analyzing comps is to compare apples to apples. This means that you should select comps that are similar to your property in terms of physical characteristics, location, market conditions, and economic factors. For example, if you are valuing an office building, you should look for comps that have similar square footage, floor plan, amenities, age, quality, occupancy, and lease terms. You should also look for comps that are in the same submarket, neighborhood, or trade area as your property, and that have sold within the last six to twelve months. Additionally, you should consider the economic factors that affect the demand and supply of your property, such as population growth, income levels, employment trends, vacancy rates, and rent levels.

3 Adjust for differences

The third step to finding and analyzing comps is to adjust for differences. No two properties are exactly alike, so you need to account for the differences between your property and the comps by making adjustments to the sales prices. Adjustments are usually made in percentage or dollar terms, depending on the type and magnitude of the difference. For example, if your property has a higher occupancy rate than a comp, you may add a percentage to the comp's price to reflect the higher income potential. If your property has a newer roof than a comp, you may add a dollar amount to the comp's price to reflect the lower maintenance cost. The adjustments should be based on market evidence and reasonable assumptions.

4 Calculate the value

The fourth step to finding and analyzing comps is to calculate the value of your property based on the adjusted sales prices of the comps. There are different methods to do this, but the most common one is to use the weighted average method. This method assigns a weight to each comp based on its similarity and relevance to your property, and then calculates the average of the weighted prices. The weight can be subjective or objective, depending on your judgment and criteria. For example, you may assign a higher weight to a comp that is closer to your property, or that has sold more recently, or that has fewer adjustments. The weighted average method gives you a more accurate and representative value than the simple average method, which does not consider the differences in quality and importance of the comps.

5 Validate the results

The fifth step to finding and analyzing comps is to validate the results. You should not rely on a single method or source of data to estimate the value of your property. You should cross-check your results with other methods and sources, such as the income approach, the cost approach, or the market feedback. You should also review your assumptions and calculations for errors or inconsistencies. You should be able to explain and justify your results to potential buyers, sellers, lenders, or appraisers, and to provide supporting documentation and evidence. You should also be aware of the limitations and uncertainties of your results, and to update them as the market conditions change.

6 Use software tools

The sixth step to finding and analyzing comps is to use software tools that can automate and simplify your process. There are many software tools available for commercial real estate professionals, such as CompStak, Reonomy, or Valuate, that can help you find and analyze comps faster and easier. These tools can help you access and filter sales data from multiple sources, compare and adjust comps based on various criteria, calculate and visualize the value of your property, and generate reports and presentations. These tools can save you time and money, and improve your accuracy and efficiency.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?