Steps to apply the market method Comparison method to reach the market value of a residential land in the Riyadh neighborhood of Jeddah city with an area of 625 m on one northern street:
- Gather information on similar properties that have recently sold:
- Property Type (Residential)
- Location (Riyadh Neighborhood, Jeddah)
- Area (625 m)
- Street (North One Street)
- Date of sale and price paid
- Make adjustments to the prices of comparable properties:
- Differences in location: The location of a property can affect its value. such as proximity to public services and facilities. Or its proximity to commercial or industrial areas.
- Differences in size: The size of a property can affect its value. Like the number of rooms and bathrooms.
- Determine the market value of the property to be appraised:
- The market value of the property to be valued is determined by finding the average prices of similar properties by weighting the ratios of each comparable property after making the necessary adjustments.
Detailed steps to apply the market method Comparison method:
- Define the scope of the research:
Initially, at the beginning. The scope of the research must be defined. This is the area where similar properties will be searched for. In this case. The Riyadh neighborhood of Jeddah should be selected as the search area.
- Collecting information:
Information on similar properties that have recently sold is gathered through various sources. Like this:
- Open data from the Ministry of Justice: Information about sold properties can be obtained from the Ministry of Justice, such as property type, location, area, street, date of sale, and price paid.
- Real estate offices: Real estate offices can be contacted for information on properties that are for sale or have recently sold.
- Real estate ads and platforms: Real estate ads can be searched online or in newspapers, magazines, and real estate platforms such as Aqar and Haraj.
- Verify the information:
The accuracy of the information collected must be verified. to make sure they are correct and up-to-date. For this example. A number of 3 similar properties in the same neighborhood and the same plan were collected from the Ministry of Justice website and confirmed their locations that they are land properties and not buildings, and confirmed their facade and the number of streets through the Ministry of Municipality and Rural Affairs map website, where you can search by plot number and plan and match it on the ground.
| Deal number | Transaction Price (SAR) | Area (square meters) | Date of the transaction | City | Neighborhood | Scheme | Widget |
| 18933669 | 800000 | 625.00 | 02/01/2023 | Grandfather | Riyadh | 184/J/S | 849/D |
| 18984641 | 780000 | 625.00 | 08/01/2023 | Grandfather | Riyadh | 184/J/S | 295/D |
| 19048546 | 810000 | 625.00 | 15/01/2023 | Grandfather | Riyadh | 184/J/S | 77/D |
- Making adjustments:
After gathering information. Adjustments are made to the prices of comparable properties to take into account the differences between the property to be valued and comparable properties. Any impact on the comparable properties must be applied, whether by features or disadvantages such as the number and width of streets, the facilities surrounding the properties, their facade, and anything that may affect the value of the property.
Adjustment characteristicsValuation propertyComparison 1Comparison 2Comparison 3Price per square meter SAR 1,280 SAR 1,248 SAR 1,296 SAR
| Land Comparison (serial) | |||||
| Type of property | land | land | land | land | |
| Property Type Adjustment | 0.0% | 0.0% | 0.0% | ||
| Type of transaction | Rating | Sale | Sale | Sale | |
| Transaction Type Reconciliation | 0.0% | 0.0% | 0.0% | ||
| Funding conditions | Criticism | Criticism | Criticism | ||
| Adjustment of financing terms | 0.0% | 0.0% | 0.0% | ||
| Terms of sale | there is no | there is no | there is no | there is no | |
| Adjusting the terms of sale | 0.0% | 0.0% | 0.0% | ||
| Market conditions | Date of assessment: | 15/02/2023 | 02/01/2023 | 08/01/2023 | 15/01/2023 |
| Normalize market conditions | 0.0% | 0.0% | 0.0% | ||
| Planning Building System | Residential Villal | Residential Villal | Residential Villal | Residential Villal | |
| Planning and Building Regulation Settlement | 0.0% | 0.0% | 10.0% | ||
| Space | 625.00 m2 | 625.00 m2 | 625.00 m2 | 625.00 m2 | |
| Leveling the area in a proverbial way | 5.0% | 0.0% | 0.0% | 0.0% | |
| Number of streets | 1 | 2 | 3 | 1 | |
| Leveling the number of streets | -5.0% | -10.0% | 0.0% | ||
| Street facades | Northern | Northwest | Southeast West | Southern | |
| Street façade leveling | 0.0% | 2.0% | 5.0% | ||
| Main Street View | 15 m | 20 m | 15 m | 12 PM | |
| Leveling the width of the main street | -5.0% | 0.0% | 2.0% | ||
| Displaying the main interface | 25.0 m | 25.0 m | 22.0 m | 20.0 m | |
| Normalize the width of the main interface compared to the depth | 5.0% | 0.0% | 2.4% | 4.0% | |
| The nature of the land | flat | flat | flat | flat | |
| Landscape leveling | 0.0% | 0.0% | 0.0% | ||
| Property Area (Neighborhood) | Riyadh | Riyadh | Riyadh | Riyadh | |
| Property Area (Neighborhood) Leveling | 0.0% | 0.0% | 0.0% | ||
| Property location and accessibility | Excellent | Excellent | average | Excellent | |
| Adjusting the distance of the property from the city center | 0.0% | 3.0% | 0.0% | ||
| Property features | there is no | Garden | 0 | Positions | |
| Property Features Adjustment | -10.0% | 0.0% | -5.0% | ||
| Other | there is no | 0 | 0 | 0 | |
| Another compromise | 0.0% | 0.0% | 0.0% | ||
| Total settlements | -20.0% | -2.6% | 16.0% | ||
| Price per meter after real estate property adjustments | 1,024 SAR | 1,216 SAR | 1,503 SAR | ||
| Weighting ratios | 33.0% | 33.0% | 34.0% | ||
- Determine the market value:
The market value of the property to be valued is determined by weighting the adjustment ratios on comparable properties and selecting larger weights for properties that are similar or somewhat similar to the valuation property after making the necessary adjustments.
| Price per square meter after weighting: | 1,250 SAR |
| Land area: | 625.00 m2 |
| Land value: | 781,372 SAR |
Factors to consider when applying the market method Comparison method:
- Number of similar properties: It is best to use as many similar properties as possible in the comparison process. to increase the accuracy of the results.
- Similarity between similar properties: Similar properties should be similar in all important aspects. Such as property type, location, size, and street.
- Market conditions: Market conditions must be considered when determining the market value of a property. such as supply, demand, and current prices.
Advantages and disadvantages of the market method Comparison method:
Advantages:
- It is based on factual data.
- It can be applied to all types of real estate.
Disadvantages:
- Depends on the availability of sufficient data on similar properties.
- Similar properties can be difficult to find in some cases.
