When Netflix executives wrote a PowerPoint deck about the organization’s talent management strategies, the document went viral—it’s been viewed more than 5 million times on the web. Now one of those executives, the company’s longtime chief talent officer, goes beyond the bullet points to paint a detailed picture of how Netflix attracts, retains, and manages stellar employees. The firm draws on five key tenets:
Hire, reward, and tolerate only fully formed adults. Ask workers to rely on logic and common sense instead of formal policies, whether the issue is communication, time off, or expenses.
Tell the truth about performance. Scrap formal reviews in favor of informal conversations. Offer generous severance rather than holding on to workers whose skills no longer fit your needs.
Managers must build great teams. This is their most important task. Don’t rate them on whether they are good mentors or fill out paperwork on time.
Leaders own the job of creating the company culture. You’ve got to actually model and encourage the behavior you talk up.
Talent managers should think like businesspeople and innovators first, and like HR people last. Forget throwing parties and handing out T‑shirts; make sure every employee understands what the company needs most and exactly what’s meant by “high performance.”
Sheryl Sandberg has called it one of the most important documents ever to come out of Silicon Valley. It’s been viewed more than 5 million times on the web. But when Reed Hastings and I (along with some colleagues) wrote a PowerPoint deck explaining how we shaped the culture and motivated performance at Netflix, where Hastings is CEO and I was chief talent officer from 1998 to 2012, we had no idea it would go viral. We realized that some of the talent management ideas we’d pioneered, such as the concept that workers should be allowed to take whatever vacation time they feel is appropriate, had been seen as a little crazy (at least until other companies started adopting them). But we were surprised that an unadorned set of 127 slides—no music, no animation—would become so influential.
If your PowerPoint font is not displayed properly in a presentation, then this post will help you. When creating a good PowerPoint presentation, it is important to choose a good font, one that fits the course at hand. Sometimes, you may have to download and use unusual fonts that are not originally part of the Microsoft Office suite.
This can cause serious problems; for example, if you send the presentation to additional persons, they may not be able to see the font because of its uniqueness and because it does not come as part of the overall PowerPoint package. If the font file is not installed on the recipient’s computer, then it will fail to load on their computer. And that will no doubt cause problems.
If your PowerPoint font is not displayed in a presentation, then here are steps you need to take to address the issue:
- Share the unique font file
- Use regular fonts
- Use embedded fonts
- Use text to shape conversion
1] Share the unique font file
One of the first things you should do here is to share the font file with the people you intend to share the presentation with. If they have the font file installed before receiving and opening the PowerPoint presentation, then they should have no problems.
- To share your font file, please open File Explorer.
- Once done, navigate directly to C:\Windows\Fonts.
- Locate the font you want to share and copy it.
- Send the font to the recipient via email, messenger, a USB thumb drive, or whatever means you have in mind.
- Remember that once the receiving party gets the file, they must copy and paste it into the C:\Windows\Fonts folder.
They should now have zero issues with viewing your shared PowerPoint presentation.
READ: How to use Copilot in PowerPoint
2] Use regular fonts
The best way to ensure your PowerPoint presentation fonts appear correctly is to use common fonts. By using fonts that are already installed on almost every Windows computer, you will have little issues when sharing presentations.
So, as it stands, you should use the fonts that are found within PowerPoint if you want your presentation to be viewable by any third-party user. Failure to do so could cause problems for others, and that’s not something you should strive for as a professional.
READ: How to add Add-ins in PowerPoint
3] Use embedded fonts
When you might want to use uncommon fonts that may not be available on the recipient’s computer, one of the best options here is to embed the fonts in your PowerPoint presentation.
We should note that this will only work across Windows computers. If the receiving party has a Mac, chances are it will not work, but if it does, then do not expect a perfect transition. With that said, let us explain how to move things forward.
- Open your presentation, then click on File.
- From there, select Options, then navigate to Save from the PowerPoint Options window.
- Look for a section that reads, Embed fonts in the file, and select it.
If you do not plan to have your PowerPoint presentation edited by others, then choose Embed Only the Characters Used in the Presentation. Doing this will reduce the size of the file since only the letters that appear in the document will be embedded.
Now, if you plan on allowing others to edit your presentation, then choose Ebed all Characters instead. Bear in mind that this will increase the file size of your document, so decide which option is best.
Finally, click the OK button, and that’s it. Now you can share the presentation with whomever you wish.
READ: How to create a Scribble Animation in PowerPoint
4] Use text to shape conversion
For those folks who are concerned about sharing their PowerPoint presentation with a person who is not tech-minded, we suggest converting fonts to shapes.
When this is done, the text will look the same always, even if the third-party user does not have a particular font installed. That’s because the text has transformed into a shape.
Let us now explain how to get this moving in the right direction.
Ensure the PowerPoint file is opened.
From there, go ahead and click on Insert.
From the Ribbon, please click on the Text Box button.
Choose the font you wish to use for this presentation.
Next, click on Home, then select a Shape from the Insert Shapes area.
Use the mouse to draw a rectangle.
The other thing to do here is to right-click on the rectangle you’ve just drawn, then choose the Send to Back option.
Doing this will allow you to see your text again.
What you must do now is select the text box, then press and hold the Shift key.
Choose the shape to ensure both shape and text box are selected.
Go to the Shape Format menu, and from there, look for the button that reads, Merge Shapes, and click on it.
Choose Intersect, and right away your text will be converted to a shape.
READ: How to make Typewriter animation in PowerPoint
How do I fix distorted text in PowerPoint?
To fix this problem, please open PowerPoint and then navigate to File > Options. After that, go to Advanced > Under the Display, then check the box that reads, Disable Hardware Graphics Acceleration. After that, click the OK button and restart the application.
Read: How to view notes in PowerPoint while presenting
Why are fonts changing in PowerPoint?
Font types will change in PowerPoint if the text uses theme fonts where these fonts of source and destination files are different. Bear in mind that this is the behavior one should expect since modern PowerPoint templates rely on Office document themes, which are defined by theme fonts.
Just like how we use extensions on web browsers to get some extra features and controls, we can have add-ins in PowerPoint. Add-ins are programs that give PowerPoint and other office applications, some additional features and commands. We can get them from Popular Office Downloads and other third-party vendors. In this guide, we show you how to add Add-ins in PowerPoint.
PowerPoint Add-ins are easy to add to PowerPoint on your Microsoft 365 account. Follow the below steps to add them.
- Click on File in the ribbon menu
- Select Get Add-ins and Visit the add-in store
- Click on Add beside the add-in you want to add
- Agree to the terms and conditions and click Continue.
Let’s get into the details of the process and add add-ins in PowerPoint.
To get started, create a new PowerPoint presentation or open an existing one. Then, click on the File button on the ribbon menu.
Select Get Add-ins and click on Visit the add-in store to see the add-ins available to add and install them.
It will open the Office Add-ins overlay window. Click on STORE to see the list of available add-ins. Search for the one you want to add or explore the store to find what you want to add. Once, you have zeroed on an add-in, click on Add beside the add-in to add it.
You have to agree to the terms and conditions of Microsoft before adding an add-in to PowerPoint. Check the box beside I agree to all the above terms & conditions. Then, click Continue.
It will automatically add the add-in you have selected to add to PowerPoint. You will find the add-ins you have added under the Add-in button on the ribbon menu.
Microsoft also lets you write your own add-ins using Microsoft Visual Basic for Applications (VBA). You can add them to PowerPoint and use them to power your presentations. To add custom add-ins, click on MY ADD-INS on the Office Add-ins overlay. Then, click on Manage My Add-ins and select Upload My Add-in.
Read: Where to download Microsoft Word, Excel, PowerPoint for Windows
Why can’t I see Add-ins in PowerPoint?
To see Add-ins in PowerPoint, you need to have Microsoft 365 account. If you are using a pirated version or some other fake version without signing in, you might not see them. You need to at least use the free version on the web to see and add add-ins in PowerPoint.
Does PowerPoint have add-ins?
Yes, PowerPoint has many add-ins available in Store. You can add them easily following the method mentioned in this guide or you can write your own add-ins using Microsoft Visual Basic for Applications and upload them to add to PowerPoint.
Related read: PowerPoint is not responding, keeps crashing, freezing or hanging.
For a presentation that's sharp, professional, and UAB-branded, utilize the new template below, available in PowerPoint and Keynote versions in standard and widescreen formats. The new, user-friendly template includes built-in instructions, presentation tips, pre-loaded photos and graphics, university facts, and numerous slide layouts. Simply use the slides you need and delete the rest.
Due to large file size, the template may take more time than usual to download completely.
Due to the robust nature of the new PowerPoint template, sharing presentations via e-mail is not ideal. If using e-mail, we recommend first compressing your presentation. Otherwise, upload your presentation to Box or OneDrive, then share a link to download.
Note: If you have issues opening the files, please right-click and choose save-as.
James T Wood is a teacher, blogger and author. Since 2009 he has published two books and numerous articles, both online and in print. His work experience has spanned the computer world, from sales and support to training and repair. He is also an accomplished public speaker and PowerPoint presenter.
At Healthline, we prioritize the medical and editorial integrity of our content. This means setting strict standards around how we create content, how we choose products to cover, how we evaluate brand partners, how we use language, and how we approach representation, inclusivity, and historical context within our content.
Our approach to content creation
The Healthline team is committed to bringing you accurate, trustworthy, and unbiased health information. Each piece of content is developed by our in-house editorial team in partnership with expert writers, medical reviewers, and fact checkers. We appreciate your curiosity about our editorial process and are proud to share our rigorous standards with you.
Our approach to product selection
We know trust is earned, so we’re happy to share more about how Healthline evaluates and selects the products we cover in our content. We aim to create content that is balanced and objective. To this end, we maintain a healthy separation between our editorial and business teams throughout the content creation process for product reviews, product roundups, and articles with shopping links to ensure that our content is editorially independent.
Our approach to diversity, equity and inclusion
We are committed to actively engaging and amplifying a variety of voices, identities, and perspectives across the health and wellness spectrum to ensure that our culture and our content reflects the diversity we see in our everyday world.
Our approach to brand and product vetting
We strive to maintain our content’s integrity and excellence by ensuring the companies we work with are companies we can stand behind. We put the brands we work with through a rigorous process of vetting prior to including them in our content. Individual products chosen by the editorial teams go through a similar vetting process to confirm brand integrity and product safety.
Our approach to conscious language
Language is a powerful tool that constructs the world around us and can create and remove identities. At Healthline, we know that language matters, and we are invested in using language to create a healthier, stronger, and more equitable world. Employing conscious language in how we speak, write, and edit reflects our awareness of and dedication to the communities that read our content.
When you add content from external files to a presentation you're preparing in Microsoft PowerPoint, the application offers you two options: embed a copy or link to the original file. Linking reduces the size of your PowerPoint file and simplifies the task of maintaining up-to-date external content in your presentation. Unlike graphic-design applications that offer you a list of the documents linked to a page-layout file, PowerPoint makes it much easier to insert linked files than to see what's linked to your work in progress. To review your linked resources, use the same procedure that enables you to update your links.
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Click on the "File" tab in the PowerPoint Ribbon. On the right side of the pane that opens, PowerPoint displays the Document Information Panel, which provides data about your current file. In the Related Documents section at the bottom, click on "Edit Links to Files."
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Click on one of the links in the Links dialog box to display the file's source location and data type. Use the buttons at the right edge of the dialog box to update the file, open it directly in the application in which you created it, change the source to another document or break the link altogether.
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Click the "Close" button to dismiss the dialog box when you've finished reviewing your links. If you updated any linked files, check the slides on which they appear to verify that the proper content appears.
The income approach to measuring a country's gross domestic product (GDP) is based on the accounting principle that all expenditures in an economy should equal the total income generated by the production of all that economy's goods and services. This approach also assumes that there are four major factors of production in an economy and that all revenues must go to one of these sources.
Therefore, by adding together all of the sources of income, a quick estimate can be made of the total production value of economic activity over a period. You must then make adjustments for taxes, depreciation, and foreign-factor payments. Learn how this method works.
Key Takeaways
- The income approach to calculating gross domestic product (GDP) states that all economic expenditures should equal the total income generated by the production of all economic goods and services.
- The alternative method for calculating GDP is the expenditure approach, which begins with the money spent on goods and services.
- GDP provides a broader picture of an economy.
- The national income and product accounts (NIPA) form the basis for measuring GDP, allowing policymakers to analyze the impact of variables like monetary policy and tax plans.
Ways to Calculate GDP
GDP is the gross domestic product of a country. This is a measurement of the total monetary value of all goods and services produced within a country over a set timeframe. GDP is usually measured over the course of a year, though it can be calculated over any timeframe.
GDP=Total National Income+Sales Taxes+Depreciation+Net Foreign Factor Incomewhere:Total National Income=Sum of allwages, rent, interest, and profitsSales Taxes=Consumer taxesimposed by the governmenton the sales of goods andservicesDepreciation=Cost allocated to atangible asset over its useful lifeNet Foreign Factor Income=Differencebetween the total income that acountry’s citizens and companiesgenerate in foreign countries,versus the total income foreigncitizens and companies generatein the domestic country
There are generally two ways to calculate GDP: the expenditures approach and the income approach. Each of these approaches looks to best approximate the monetary value of all final goods and services produced in an economy over a set period.
The major distinction between each approach is its starting point. The expenditures approach begins with the money spent on goods and services. Conversely, the income approach starts with the income earned from the production of goods and services.
Income earned includes wages, rents, interest, and profits.
Formula for Income Approach
It’s possible to express the income approach formula to GDP as follows:
TNI=Sales Taxes+Depreciation+NFFIwhere:TNI=Total national incomeNFFI=Net foreign factor income
Total national income is equal to the sum of all wages plus rents plus interest and profits.
Why GDP Is Important
Some economists illustrate the importance of GDP by comparing its ability to provide a high-level picture of an economy to that of a satellite in space that can survey the weather across an entire continent. GDP provides information that policymakers and central banks can use to judge whether the economy is contracting or expanding, whether it needs a boost or restraint, and if a threat such as a recession or inflation looms on the horizon.
The national income and product accounts (NIPA), which form the basis for measuring GDP, allow policymakers, economists, and businesses to analyze the impact of economic variables on both the overall economy and specific sectors of the economy. These variables can include:
Along with better-informed policies and institutions, the skillful use of national accounts by policymakers has contributed to a significant reduction in the severity of business cycles since the end of World War II.
Economic Cycle and GDP
GDP does fluctuate because of business cycles. When the economy is booming and GDP is rising, inflationary pressures build up rapidly as labor and productive capacity near full utilization. This leads central bank authorities to commence a cycle of tighter monetary policy to cool down the overheating economy and quell inflation.
As interest rates rise, companies cut back, the economy slows down, and companies cut costs. To break the cycle, the central bank must loosen monetary policy to stimulate economic growth and employment until the economy is strong again.
Which Approach To Measuring GDP Is Better?
Both the income approach and the expenditures approach are useful ways to calculate and measure GDP, though the expenditures approach is more commonly used.
Is a High GDP Good?
A high GDP is generally good for a country because it indicates a high degree of economic activity and material well-being. However, there are nuances. For example, if a country has a high overall GDP but a low per-capita GDP, this usually indicates a high degree of income inequality, which can be dangerous for a country's long-term economic growth, stability, and over appeal as a place to live.
Which Is More Useful, Real GDP or Nominal GDP?
No matter which method of calculating GDP you use, it is best to calculate GDP on a real basis, rather than a nominal basis. Real GDP accounts for inflation and provides a more useful measurement that allows different GDP values to be compared over time.
The Bottom Line
Gross domestic product, or GDP, is a measurement of the total value of all the goods and services produced within a country within a specific period of time, usually a year. It provides a broad pocture of a country's economic health and is used by policymakers and economists to assess the impact of monetary policy, global trends, and other economic changes. GDP can be calculated using one of two approaches.
The income approach to calculating GDP states that all expenditures should equal the total income generated by all goods and services within the economy. The expenditures approach, on the other hand, adds up consumer spending, investment, government expenditure, and net exports. The expenditures method is more widely used.
A research study conducted by Forrester Consulting in 2021 reveals that 70 percent of Filipino consumers are struggling with debt. This percentage is the highest recorded percentage across citizens of nine countries included in the study.
Filipinos need to manage debt well since there are many negative consequences if finances are not in order.
High levels of debt can lead to more financial problems. High levels of debt can lead to high levels of stress. There are a number of debt-management approaches that can be considered.
One such approach is the popular “debt snowball” approach. An individual must take stock of what he or she owes. One should list down all loans from smallest to largest in terms of value. Once the list is completed, the smallest loan gets paid in full first. Minimum payments are done on the other loans. Once the smallest loan is fully paid, the next smallest loan then gets fully paid. Ultimately, the largest loan is the last to be paid. This approach is like a build-up approach and the hope is that all loans will eventually be settled.
A major advantage of the “debt snowball” approach is that it is relatively simple. Its simplicity is probably the main reason as to why it has become a popular approach in addressing debt. It is simple because the general guideline is quite clear in terms of prioritizing the smallest loans over the big loans when it comes to payment.
When guidelines are clear, execution becomes easy. When execution becomes easy, the chances of achieving financial goals like reducing debt or totally eliminating debt become a lot higher.
An advantage of the “debt snowball” approach is that it has a motivational component. As an individual is able to address the smallest debts first, feelings of accomplishment and satisfaction are generated. Managing debt will not be an abstract concept.
Quick wins can boost the confidence of the individual in the ability to solve problems. Quick wins can inspire the individual to stay in the course of going through the process of debt management. Winning small battles can hopefully lead to winning the war on debt.
An advantage of the “debt snowball” approach is that it can work if an individual has quite a number of low-interest loans. Having many loans can be overwhelming in terms of allocating scarce income resources. Many might just give up and raise the white flag.
As the smallest loans are paid in full and assuming that the succeeding loans have relatively low interest rates, the financial capability to settle bigger loans is enhanced because money gets freed up and money builds up. Resources can be sufficient to address debt.
However, just like any financial approach, the “debt snowball” approach is not perfect. There are key disadvantages of the debt snowball approach.
One disadvantage is that over the long haul, it may prove to be a costly approach in managing debt especially if the loans that are not prioritized are the ones that have the higher interest rates. Higher loan amounts that have high interest rates can make things more cumbersome. Quick wins might just prove to be lower in value if the bigger debt situation is viewed.
A disadvantage of the “debt snowball” approach is that it can lead to a longer payment period before all debts are settled. This is because the balance of the bigger loans will just keep accruing if they are not settled. Having a longer debt payment journey will prove to be a test of resilience for the individual.
Having a longer debt-payment journey can lead to high opportunity costs with respect to foregone items like savings and investments. Having a longer payment journey can delay attainment of financial freedom.
The “debt snowball” approach is one approach that can be considered for debt management. At the end of the day, an individual can decide to use or not use it depending on goals and timelines. As more Filipinos are able to address debt, more Filipinos become financially-free and the economy becomes stronger.
Gemmy Lontoc is a registered financial planner of RFP Philippines. To learn more about personal-financial planning, attend the 103rd RFP program this September. To inquire, e-mail info@rfp.ph or text at 0917-6248110.
What Is a Sales Comparison Approach (SCA)?
The term sales comparison approach refers to a real estate appraisal method that compares one property to comparables or other recently sold properties in the area with similar characteristics. Real estate agents and appraisers may use the sales comparison approach when evaluating properties to sell. This method accounts for the effect that individual features have on the overall property value. In other words, the total value of a property is the sum of the values of all of its features.
Key Takeaways
- A sales comparison approach is a valuation method used in the real estate industry that compares one property to similar ones recently sold in the area.
- The SCA is used as the backbone for the comparative market analysis which considers prices of recently sold properties that are similar and within the same geographic area.
- Some of the common characteristics that make up the SCA include location, recently sold listings, features, age and condition, and average price per square foot.
Understanding the Sales Comparison Approach (SCA)
The sales comparison approach helps real estate professionals and buyers determine if the price of a home is fair and comparable to the current market. Professionals use similar properties that were recently sold within a short distance of the subject property—usually in the same neighborhood—that share similar characteristics as a comparison.
The SCA is used as the backbone for the comparative market analysis (CMA). This is an analysis of the prices of recently sold properties that are similar and within the same geographic area. In other words, the approach often entails looking at local properties to see what they have in common. From there, appraisers can determine a value for a property based on its features.
Although there are many steps that a real estate appraiser can take in evaluating a property's value, the following are some of the most common characteristics used in an SCA:
- Location and neighborhood: Geography may directly impact the value of real estate. It's important to compare homes in the same neighborhood rather than those found in another part of town. Factors considered include proximity to schools, nearby bodies of water, parks, and how close they are to highways and overpasses, as well as pollution levels.
- Recently sold listings: These properties can provide a starting point for the value of homes in the area. Although features and the market factor into the sale price, reviewing property values and exact sales are good baseline numbers.
- Features: A home should be compared with properties with the same number of bedrooms, garages, and bathrooms. The comparison should include homes of about the same square footage on parcels of land that are about the same size.
- Age and condition: It's important to compare homes of similar age as well as soundness. A home's condition significantly influences an appraisal. For example, there may be two similar homes in the same neighborhood. But if one is in need of repair, it can seriously affect its value.
- Average price per square foot: Once similar homes are compiled, take each of their sale prices and divide them by their square footage. The result yields the cost per square foot based on the homes in the sales comparison analysis. Take the average cost per square foot for all comparable homes and multiply that number by the square footage of the home being appraised.
Note that the IRS lists the market or sales approach as an acceptable method of analyzing an asset's valuation for tax purposes.
Performing Appraisals Using the Sales Comparison Approach
For a somewhat simple appraisal method, SCA actually involves a number of different steps. These steps are outlined below, and though the process may feel different for different markets or types of properties, these steps are usually taken across most types of properties.
Step 1: Identify Property
Begin by clearly identifying the subject property that you're appraising. Gather detailed information about its physical attributes, location, and any unique features. This step establishes the starting point for comparing it to other properties so, even though it may feel straightforward, it is among the most important steps.
Step 2: Select Comparables
Carefully select comparable properties that have recently sold and share similarities with the subject property. Consider the factors discussed in the previous section when selecting similar properties. The goal is to find properties that potential buyers would consider comparable to the subject property.
Step 3: Collect Data
Thoroughly collect data for both the subject property and the chosen comparables. This includes obtaining accurate property details, sale prices, transaction dates, square footage, lot size, room counts, and any significant features. The accuracy and completeness of this data are crucial for making informed comparisons and performing data analysis. Take note of variances or major differences worth adjusting for.
Step 4: Perform Adjustments
Examine the differences between the comparables and the subject property. Identify attributes where variations exist such as larger square footage or superior amenities in a comparable. It may be somewhat subjective, but determine how much these differences would influence a buyer's perception of value.
Step 5: Perform Portfolio Reconciliation
After making adjustments, you may have a range of adjusted sale prices for the comparables. Consider the relative relevance and reliability of each comparable. Weight the impact of each comparable based on factors like similarity to the subject property, recency of sale, and market conditions. Using this new lense, you should reconcile the adjusted values to arrive at a more accurate value range for the subject property.
Step 6: Determine Final Estimate
From the reconciled range of adjusted values, calculate a final estimated value for the subject property. This can be done by averaging the adjusted sale prices of the comparables within the range or applying other appropriate statistical methods. The goal is to arrive at a single estimated value that reflects the property's market value based on the comparables' data.
Advantages and Disadvantages of the SCA
Pros of the Sales Comparison Approach
The SCA approach is grounded in real market transactions, making it highly relevant and reflective of current market conditions. It considers the genuine prices at which properties similar to the subject property have recently sold. Therefore, it's especially effective when there is a substantial number of comparable properties available for analysis.
The concept of comparing exact sales of similar properties to the subject property is easy to understand, making it accessible to both appraisers and clients. Therefore, the SCA method is somewhat known for being transparent. The SCA method also sheds light on the historical deviations of an asset's price. Since it relies on exact sales data, this approach can capture changes in market conditions and trends over time.
When multiple comparable sales are analyzed and adjustments are made for differences, the approach provides a range of values that can serve as a validation of the estimated value. If the adjusted values are consistent across comparables, it lends credibility to the final estimate.
Last, the sales comparison approach is a widely accepted and practiced method in the real estate industry. This widespread usage enhances its credibility and acceptance among appraisers, lenders, and other stakeholders.
Cons of the Sales Comparison Approach
The quality and quantity of comparable sales data can vary significantly based on the property type, location, and market conditions. In some cases, there might not be enough exact and relevant comparable sales to accurately estimate the value of the subject property. For properties that are one-of-a-kind or have features that are difficult to find in the market, the sales comparison approach might not be suitable.
Making adjustments for differences between the subject property and comparables can be subjective and challenging. For example, determining the value of specific features like swimming pools, architectural styles, or interior upgrades can be difficult, and differing opinions among appraisers can lead to inconsistent results.
SCA relies heavily on exact sales data, which means it might not capture rapid market fluctuations or sudden changes in supply and demand. In rapidly changing markets with volatility, using older comparable sales might not accurately reflect current property values.
Finally, selecting truly comparable properties is crucial for accurate valuation. If the chosen comparables are not truly similar to the subject property in terms of size, location, condition, and other relevant factors, the valuation results can be skewed. During analysis, it may not be evidently clear which assets are comparable and which may be red herrings that are not suitable comparisons.
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Grounded in real transactions, making it particularly relevant
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Has a wide applicability
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Is a somewhat simple concept that can be easily followed and documented
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May allow for customization (i.e. for individual property features)
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May lend itself to historical analysis by tracking changes over time
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May not have abundant data depending on the asset type or market
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May not be suitable for unique properties
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May be difficult to adjust based on available data
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Will not always reflect shortest-term market fluctuations
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Relies somewhat on subjective interpretation
Since the sales comparison approach isn't an official appraisal, owners may need to hire an appraiser for unique properties and those that are hard to value.
Special Considerations
There are many other features that may increase the value of a home. However, a sales comparison analysis is not an exact science since the value of a home is somewhat subjective, meaning one family may find more value in it than another, thereby increasing their offer. As stated earlier, outside factors such as the overall state of the economy, the job market, and the state of the real estate market all play heavily into how much a home is sold for or how long it sits on the market.
Remember, the sales comparison approach used in real estate valuation is not an official appraisal. In cases where a unique property is to be valued or one whose value is difficult to determine, a formal appraisal may be required. This means hiring an appraiser—an independent and unbiased professional who determines the property's fair value by using certain facts, figures, and other considerations.
What Are Comparable Sales in the Sales Comparison Approach?
Comparable sales, often referred to as "comps," are properties that have recently sold and are similar to the subject property in terms of relevant characteristics such as location, size, style, age, condition, and amenities. These sales are used as a basis for estimating the value of the subject property through a process of comparison and adjustment.
What Types of Properties Is the Sales Comparison Approach Suitable for?
The sales comparison approach is suitable for a wide range of property types, including residential, commercial, and vacant land. It is particularly effective when there is a significant number of comparable properties available and when the market conditions are relatively stable.
How Do Appraisers Select Comparable Properties for Analysis?
Appraisers select comparable properties based on their similarity to the subject property. They consider factors like location, size, style, condition, age, and exact sales dates. The goal is to find properties that are as similar as possible to the subject property to provide a reliable basis for comparison.
How Does the Sales Comparison Approach Account for Property Uniqueness?
While the sales comparison approach considers property uniqueness, it relies on finding comparable properties that share similar attributes with the subject property. However, truly unique features might not have direct comparables, making the adjustment process more challenging and potentially leading to less accurate valuations.
The Bottom Line
The sales comparison approach is a real estate valuation method that estimates a property's value by comparing it to recently sold properties with similar characteristics in the same market area. By analyzing these comparable sales and making adjustments for differences in features, size, condition, and location, appraisers derive an estimated value for the subject property based on genuine market transactions.
