You’re called out of an investment committee meeting at your real estate company for an important phone call. Stepping back into the meeting you find you’ve missed the initial description of the Subject Property, but a heated debate on which Comparable Properties should be used to evaluate the property is underway. Glancing at a handout your analysts have prepared, you see observe the following table: Comp A Comp B Comp C Comp D Comp E Distance from Subject 0.50 Miles 0.75 miles 1 mile 0.25 miles 0.90 miles Year of Construction 1990 2005 1985 2015 2006 Sq. Ft. 14,000 SF 24,000 SF 10,000 SF 25,000 SF 37,000 SF Months Since Sale 3 months 9 months 12 months 4 months 2 months The group turns to you to break the tie. Based only on the information provided above, select the most prudent answer for you to give: A. "They’re all close enough. Let’s just average the data from all of them.” B. “Without knowing anything about the Subject Property, it’s impossible to say which of these comps would be most appropriate.” C. “There's just too much variation among the comps provide a meaningful picture. We can’t make a decision without finding additional sales comps.” Group of answer choices A B C
You’re called out of an investment committee meeting at your real estate company for an important phone call. Stepping back into the meeting you find you’ve missed the initial description of the Subject Property, but a heated debate on which Comparable Properties should be used to evaluate the property is underway.
Glancing at a handout your analysts have prepared, you see observe the following table:
|
|
Comp A |
Comp B |
Comp C |
Comp D |
Comp E |
|
Distance from Subject |
0.50 Miles |
0.75 miles |
1 mile |
0.25 miles |
0.90 miles |
|
Year of Construction |
1990 |
2005 |
1985 |
2015 |
2006 |
|
Sq. Ft. |
14,000 SF |
24,000 SF |
10,000 SF |
25,000 SF |
37,000 SF |
|
Months Since Sale |
3 months |
9 months |
12 months |
4 months |
2 months |
The group turns to you to break the tie. Based only on the information provided above, select the most prudent answer for you to give:
A. "They’re all close enough. Let’s just average the data from all of them.”
B. “Without knowing anything about the Subject Property, it’s impossible to say which of these comps would be most appropriate.”
C. “There's just too much variation among the comps provide a meaningful picture. We can’t make a decision without finding additional sales comps.”
Analysis of various descriptions on comparable properties:
| Description | Analysis |
| Distance from Subject | There is too much variation in distance from subject. No inference can be drawn based on distance. |
| Year of Construction | Variation is too high. Oldest being in 1985( Comp C) and the latest being in 2015 (Comp D) |
| Sq. Ft. | Variation is too high. Least area is 10,000 SF ( Comp C) and the largest area is 37,000 SF (Comp E) |
| Months Since Sale | Variation is fairly high, spreading from 2 months to 1 year. Within that 1 -year, the market conditions might have changed. |
For evaluation of property using an analogy of the given descriptions, such an analogy must help in drawing an inference and based upon such inference an acceptable conclusion must be drawn out.
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