Define Matched Pair Analysis in Real Estate

"A Deep Dive for Real Estate Agents and Appraisers"

Let's say an appraiser is asked to determine the value of a 3-bedroom, 2-bathroom house in a particular neighborhood. They might use Matched Pair Analysis to compare the house to other similar properties in the area that have recently sold.

The appraiser would begin by researching recent sales in the area to find properties that are similar to the house they are appraising. They would look for properties with the same number of bedrooms and bathrooms, similar square footage, and similar features.

Once the appraiser has identified a few potential matches, they would then analyze the sales data for those properties. This might include looking at the sale price, the date of the sale, and any unique features or circumstances related to the sale.

The appraiser would then adjust the sale prices of the matched properties to account for any differences between them and the house they are appraising. For example, if one of the matched properties has a larger backyard or an additional bathroom, the appraiser might adjust its sale price upward to reflect those features.

After making these adjustments, the appraiser would then calculate an estimated value for the house they are appraising based on the adjusted sale prices of the matched properties. This estimated value would take into account the unique features and characteristics of the house being appraised as well as the sales data for the matched properties.

Overall, Matched Pair Analysis is a valuable tool for real estate appraisers because it helps ensure that their valuations are accurate and fair. By comparing a property to similar properties that have recently sold, appraisers can account for differences in features and characteristics to arrive at a more precise value for the property being appraised.