Valuation Technique: Paired Sale Analysis

A paired sale analysis isolates the value impact of a single property characteristic by comparing two similar sales that differ only in that specific attribute.

Let’s see how it works in our example.  We identified two properties that are similar in location, size, and other characteristics – except for one variable, which in this case we want to figure out what’s the premium for small industrial buildings with dock-high loading capacity. 

Comps 1 and 2 are located in the same area and transacted recently.  They are sufficiently similar in almost all aspects including building size, year built, concrete tilt-up construction, site area, land-to-building ratio, clear height, and office ratio.  The only notable difference here is that Comp 2 offers dock-high loading capacity.

If Comp 1 sold for $460/SF and Comp 2 sold for $485/SF, and the only significant difference is that one offers dock-high loading capacity, the 5% premium can likely be attributed to that.

This valuation technique ensures that the adjustments you apply in the sales comparison approach represent actual market data – providing clarity and credibility in your work.