Site

Key Takeaways

• In a market analysis the site is the property being evaluated, and the comparables are the sold properties measured against it.
• Adjustments are made to the comparables and never to the site, because the value of the site is the unknown the analysis is solving for.
• A comparable that is superior to the site is adjusted downward, and a comparable that is inferior to the site is adjusted upward.
• A broker opinion of value on the site is not an appraisal, and in Washington a written broker price opinion issued to certain third parties must say so (RCW 18.140.020).

What It Means

In a market analysis, the site is the property under evaluation, the one the seller wants priced. The other half of the analysis is the set of Comparables, recently sold properties similar enough in location, size, age, and condition to say something useful about what the site is worth. Every number in a Comparative Market Analysis comes out of that pairing.

The point students miss is which side moves. The site is never adjusted. It is the fixed reference, the property whose value is unknown, so there is nothing to adjust it toward. All adjustments are applied to the comparables, and they run opposite to the feature. If a comparable has a third bathroom the site does not have, that comparable is superior, so its sale price is adjusted down to estimate what it would have brought as an equal of the site. If a comparable has a carport where the site has a two car garage, the comparable is inferior and gets adjusted up.

Once every comparable has been adjusted, the adjusted prices bracket a range. The broker reconciles that range into a suggested list price for the site, usually leaning on the comparable that needed the smallest adjustments, since heavy adjusting is a sign of a weak match.

How It Works in Washington

In Washington, the work a broker does on the site sits just short of a regulated activity, and the boundary is worth knowing. A market analysis is an opinion of value prepared to help a seller or buyer decide on price. A formal Appraisal is regulated work under chapter 18.140 RCW, performed by a state certified or state licensed appraiser.

RCW 18.140.020(6) draws the line. It says the chapter does not preclude an individual licensed by the state of Washington as a real estate broker from issuing a brokers price opinion. It then attaches a condition: if the opinion is written, or given as evidence in a legal proceeding, and is issued to a person who is not a prospective seller, buyer, lessor, or lessee as the only intended user, it must carry a statement substantially saying that it is not an appraisal as defined in chapter 18.140 RCW and that it was prepared by a real estate licensee under chapter 18.85 RCW who is or is not also state certified or state licensed as an appraiser. The same subsection bars using that opinion as an appraisal in conjunction with a federally related transaction. So a market analysis of the site prepared for your own seller carries no such statement, while the same document sent to a lender or offered in court does.

Example

Priya lists a three bedroom rambler in Spokane Valley. That house is the site. She pulls three sales that closed within the past four months in the same neighborhood.

• Comp A sold at $415,000 and has a finished basement the site lacks. Comp A is superior, so Priya adjusts it down $18,000, giving an adjusted price of $397,000.
• Comp B sold at $372,000 with a one car garage where the site has a two car garage. Comp B is inferior, so she adjusts it up $9,000, giving $381,000.
• Comp C sold at $402,000 and is nearly identical except for a newer roof, so she adjusts it down $6,000, giving $396,000.

Notice that nothing was adjusted on the site itself. The adjusted comparables bracket a range from $381,000 to $397,000, and Priya reconciles to a suggested list price of $395,000, weighting Comp C most heavily because it needed the smallest adjustment. Because she hands the analysis to her own seller and to no one else, RCW 18.140.020(6) does not require the brokers price opinion statement.

Common Mistakes and Exam Traps

• Adjustments are made to the comparables, not to the site. Any answer choice that adjusts the property being evaluated is the distractor.
• A superior comparable is adjusted downward and an inferior comparable is adjusted upward. It feels backward until you read it as making the comparable equal to the site.
• In a market analysis, site means the subject property. It is not being used here as a synonym for vacant land.
• A broker market analysis is an opinion of value, not an appraisal, and in Washington it may not be used as an appraisal in a federally related transaction.