The Art of Comp Selection
One of the trickier home features to account for in a Comparative Market Analysis (“CMA”) is a busy street.
For a family with little kids, a busy street may very well be a deal breaker ” in which case the discount is theoretically infinite.
At the other extreme, an investor looking for a rental property may see the location as a plus: free advertising!
Of course, not all busy streets are created equal: depending on how far the home is set back; elevation differences; the individual home’s layout; and even landscaping and other topography, and the noise level/loss of privacy can vary significantly.
Two Strategies
Faced with so many variables, Realtors and Appraisers can always simply choose an average discount “ say, 10% off.
Strategy #2?
Choose as Comp’s (“Comparable Sold Properties”) only homes that are also located on busy streets.
Even better: the same busy street.
Then, there’s no need to make any adjustment, because all the homes have the same attribute (in CMA terms, the adjustment cancels out).
Of course, for that strategy to work, there have to be enough recent, similar transactions to price off of.
In the Twin Cities, that’s often the case for homes on such busy thoroughfares as Xerxes, France, Lyndale, and Minnetonka Blvd.
P.S.: The same principle applies to calculating positive adjustments, for lakeshore, city views, etc.
See also, “Explaining High Turnover on a Busy Street (The OTHER Reason)”; “What’s It Worth?” or, “Accounting for a Basement Bowling Alley” (But Preferably, Not)”; and “How Appraisers Account For a Bowling Alley in the Basement (Ideally).”
Plus: “Marketing a Home on a Busy Street”; “You Can’t Change a House’s Location (Can You??)”;“(Manhattan) Real Estate Term of the Day: “View-Break”; and “Garage/Driveway Switcheroo.”
