Which of the following is least likely to be considered in establishing the value of a property by the sales comparison approach?

The sales comparison approach is a valuation method that estimates a property's value by analyzing the sale prices of similar, recently sold properties (comparables). Adjustments are made to the comparables' sale prices to account for differences between them and the subject property. Key factors for comparison include the date of sale (to adjust for market changes over time), lot size, and the building's square footage. The capitalization rate, however, is a fundamental component of the Income Approach to valuation, which is used for income-generating properties. It represents the rate of return on a real estate investment and is used to convert net operating income into an estimate of value.

A. The date of sale is a critical factor used to adjust for changes in market conditions between the time the comparable sold and the date of the appraisal.

C. The size of the lot is a fundamental physical characteristic that directly influences value and is a standard point of comparison and adjustment.

D. The square footage of the building is one of the most significant determinants of value and a primary element used for adjustment in this approach.

1. Ling, D. C., & Archer, W. R. (2018). Real Estate Principles: A Value Approach (6th ed.). McGraw-Hill Education.

Chapter 7, "Valuation Using the Sales Comparison and Cost Approaches," Section 7.2, pp. 176-181: This section details the process of the sales comparison approach, explicitly listing "time since sale," "lot size," and "size of structure" as standard elements of comparison and adjustment.

Chapter 9, "Valuation Using the Income Approach," Section 9.3, pp. 228-231: This section defines the capitalization rate (Ro) as the ratio of a property's Net Operating Income (NOI) to its value, establishing it as the central tool of the income approach, not the sales comparison approach.

2. New Jersey Administrative Code, Title 11, Chapter 5 (New Jersey Real Estate Commission), Section 11:5-6.4(g).

This rule outlines the requirements for a Comparative Market Analysis (CMA), a tool used by licensees that is based on the same principles as the sales comparison approach. It mandates that the analysis be based on properties that are "comparable to the subject property with regard to location, features, and condition," which directly supports the inclusion of lot size and square footage as key considerations. It makes no mention of capitalization rates.