What does the comparison method in property valuation involve?

The principle of the comparison method

The comparison method, also called the market method, is the most widely used for residential property. It rests on a simple idea: a property's value is revealed by the prices at which equivalent properties have actually sold recently, in the same environment.

It is considered the most reliable for ordinary residential property because it relies on observed market data, not theoretical assumptions. Its quality depends directly on the relevance of the comparables selected.

Selecting good comparables

A relevant comparable must be close to the property being valued across several dimensions. The more numerous and homogeneous the comparables, the more robust the valuation.

• Location: same neighbourhood, ideally same street or same block, because the price per square metre varies strongly from one micro-area to another.
• Typology: same type of property (flat or house), comparable number of rooms.
• Floor area: similar areas, because the price per square metre is not linear (small properties often sell for more per square metre).
• Date: recent sales, to reflect the current state of the market.
• Characteristics: similar floor level, lift, outdoor space, general condition and energy class.

Calculating then adjusting the price

Once the comparables are selected, you derive a reference price per square metre, often a mean or a median after setting aside outliers. This reference price is then weighted by the floor area of the property being valued.

Finally comes the adjustment step: you correct upward or downward to account for the differences between the property and its comparables. A high floor with a lift, a good aspect, a like-new condition or a good energy label justify an increase; a ground floor on the street, a poor energy label or renovation work to be planned require a discount. These adjustments, expressed as percentages, turn an average market price into a value specific to the property.