How do I determine whether a property is comparable?
Look for these characteristics in determining whether the sold property is comparable:
- lot size
- square footage
- home style
- age
- location
What if the characteristics aren’t identical?
Unfortunately, you probably won’t find an exact comparable sale. To account for this, you need to adjust the sale prices of the comparable properties. This will require some analysis on your part to determine whether these differences increased or decreased the sale price, and, if so, by how much. The adjusted sale price is your estimation of what the property would have sold for if all the characteristics were the same.
Hypothetical Analysis
We suggest you create a grid like the one shown here to help you compare all of the properties.
| Hypothetical Comparable Sales Analysis (Values are strictly estimates and should not be used in your analysis) |
||||
| Attribute | Your home | SALE #1 | SALE #2 | SALE #3 |
|---|---|---|---|---|
| Sale Price | $210,000 | $250,000 | $270,000 | |
| Sale Date | Recent | Recent | Recent | |
| Property Condition | Good | Good | Good | Good |
| Year Built | 2006 | 2006 | 2006 | 2006 |
| Square Feet | 1,500 | 1,500 | 1,500 | 1,500 |
| No. of Bedrooms | 3 | 3 | 3 | 3 |
| No. of Baths | 1 | 1 | 1 | 2 (-$12,000) |
| No. of Garage Spaces | 2 | 2 | 2 | 2 |
| Location | Avenue A | Avenue B inferior location (+$30,000) |
Avenue C similar neighborhood |
Avenue A |
| Lot Size | ½ acre | ½ acre | ½ acre | ½ acre |
| Basement | Full | Full | Full | Full |
| Adjusted Sale Price | $240,000 | $250,000 | $258,000 | |
Research
Let’s say your home is a 1,500 square feet ranch with 3 bedrooms, 1 bathroom, full basement, and two-car garage on ½ acre of land. It was built six years ago in a nice neighborhood. After doing some research, you find three comparable properties recently sold at market value. However, not all of the characteristics match up. Sale #1 is in a less desirable (or inferior) location and Sale #3 has an additional bath. Sale #2, though, is almost identical to your home.
Adjust sale price
Since Sale #1 and Sale #3 aren’t identical to your home, you must compensate for these differences by adjusting the sale price of each property. To do this, you have to guess what the property would have sold for if the property had the same characteristics as your own. Since you already have the sale price as a baseline, you only have to estimate the value of the differing characteristics.
For instance, you can safely assume that Sale #1 would have sold at a higher price if it was located in your neighborhood, which is the nicer one between the two. You then estimate that the increase in value would be around $30,000. The adjusted sale price for Sale # 1 is thus the sale price plus $30,000.
Next, you move on to Sale #3 and determine that not having the extra bath would decrease the sale price by about $12,000. Because Sale #2 is almost identical to your property, no adjustments are necessary.
Estimate of your home’s market value
Now you have three sale prices that can be used as a rough estimate of your home’s market value.
Where can I find comparable sales?
- Local assessors’ offices – They should be able to provide the sales history of a particular house, neighborhood, or style of architecture. Some assessors also provide lists of recent sales that you can browse and compare to the assessment roll.
- Municipalities – Some choose to provide local sales in their offices or online.
- Online databases – Search for them using keywords such as “comparable home sales” or “comparable sales”. In addition, you may wish to try searching “real estate database – New York State” for additional property information.
- Local newspapers – These are good sources of real estate information. They often have quarterly sales reports in the real estate or business sections.
- Real estate agents – They may be willing to share their expertise and sales history information.
How does my home’s market value affect my property taxes?
Generally, property taxes are based on the estimated market value of your home. Your local assessor determines the estimated market values of all the properties in the community. Your assessor may use the sales comparison approach or any other method to arrive at your property’s estimated market value, which is available on the assessment roll and your property tax bill.
The assessor only estimates each property’s market value during a reassessment or when a property has a physical change. Some communities have not had a reassessment in several years or even decades. As a result, the estimated market value shown on the assessment roll or your property tax bill may not actually reflect your home’s current market value.
If you conclude that the assessor’s estimated market value of your home is too high, then you should contact the assessor’s office to learn the procedures for an informal assessment review.
During the informal review process, you and the assessor can each discuss your property’s characteristics and how the market value estimate was determined. If you remain unsatisfied with the assessment, you have the right to a formal administrative and judicial review of the assessment. The assessor can provide you with information on these processes.