Under the sales comparison approach to valuation, a subject property has 3 bedrooms, two bathrooms and is on a golf course. The
comparable property has 3 bedrooms, two bathrooms and is not on a golf course. The comparable property is priced at $690,000. The value of a golf course location is estimated to be $70,000. How much should you price the subject property?
Sales comparison approach to valuation in real estate values properties by comparing their similar characteristics, and the features are priced. The total value of a property is thus the addition of all features.
In the instance given, both properties have 3 bedrooms and 2 bathrooms and so using comparison theses features are equally priced at $690,000.
So the property with the golf course will have $690,000 added to the value of the golf course ($70,000).
Scatter Diagrams are convenient mathematical tools to study the correlation between two random variables. As the name suggests, they are a form of a sheet of paper upon which the data points corresponding to the variables of interest, are scattered.
Suppose that a large tree on Betty's property is blocking Chuck's view of the lake below. Betty accepts Chuck's offer to pay Betty $100 for the right to cut down the tree. This situation describes the Coase theorem.
