Comps Need a Reason Code
Evaluate comparable sales by adjusting for the factors that explain pricing differences.
The average of weak comps is not stronger than the comps themselves. Decide the comparison criteria first Before looking at prices, decide which differences should matter for this asset type. Multifamily may emphasize unit mix, vintage, renovations, tax load, and rent growth. Retail may emphasize tenant credit, lease term, frontage, traffic, and co-tenancy. Industrial may emphasize clear height, loading, power, access, and yard. Assign a role to each comp A comp can be an anchor, upper bound, lower bound, directional signal, or discard. That role should come from evidence, not convenience. If the comp sold with unusual financing, distress, or…
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