:: REAL PROPERTY
AREA SALES ANALYSIS
What is an Area Sales Analysis?
An area sales analysis is a listing of property sales in a given area or neighborhood that have occurred during a specified time. In Maryland, all sales are recorded with the local assessment office as deeds transferring the property are recorded with the Clerk of the Court. These sales are reviewed and the sales that are considered to be valid, arms-length transactions are included on the area sales analysis report.
For each property the following characteristics are identified:
2. Property Type-Split Level, Split-Foyer, Detached Dwelling, Townhouse End, Townhouse Center, etc.
3. Stories - Split Foyer, 1 Story with Basement, 1 Story No Basement, 2 Story with Basement, etc.
4. Year Built
5. Enclosed Area - The total of the foundation square footage (both finished and unfinished) times the story height of each section of the dwelling.
6. Land Area - Total land area expressed in square feet, number of acres or simply as the number of building sites.
7. Sales Date
8. Sales Price
9. Estimated Market Value - An estimate of the market value of the property based on the analysis of market data as of the indicated date.
10. Account Number
How Is It Used by the Department?
The Area Sales Analysis is used as a part of our valuation process. Residential property is valued using both a cost model and a sales comparison model. The basic concept of the sales comparison model is that the estimated market value of a property equals the sale price of a comparable property after adjustments for differences are made. For example, if Property X has a garage but the comparable has none, the value of the garage would be added to the comparable=s sale price. The result would be evidence of what Property X=s selling price might be. Assessors use more than one comparable to determine values using the sales approach. They also use more complex models that incorporate many more factors. Rather than considering properties one at a time, assessors use mass appraisal techniques and computer software to appraise many properties of the same general type. This listing represents one part of the total process to determine market value.
The Department also uses the sales analysis as a quality control measure. For assessments, one measurement of quality is the ratio of the assessed value to the sales price. Simply stated, a ratio is the relationship of two numbers-in this case the assessed value (the Department=s estimated market value) divided by the sale price. It allows us to measure how closely our assessed values compare to the actual sale prices.
How Is It of Use to the Property Owner?
The property owner can use it as a tool to compare their property to similar properties that have recently sold in their neighborhood or surrounding area. The best indicator of fair market value is market activity. Buyers and sellers create market values by their transactions. In an appeal, the best evidence of market value is sale price - the sale price of the subject property or of similar properties.
Go through the area sales analysis (you've requested from your local Assessment Office) to find properties that are most similar to the property in question. Compare the market values or the prices at which the properties have sold. Remember, however, dates are important when comparing values. Assessed values are as of January 1, of the year indicated on the report, sale prices are as of the date of sale. The real estate market is constantly changing. Therefore, the most recent sales of comparable properties typically offer the best evidence of market value.
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