 How
many here made a qualitative
decision this morning?
 Who
decided that this program would
be more beneficial to them than other
programs?
 Who
took the time to analyze what
percentage or dollar amount more
benefit they would derive from this
particular program?
What is Qualitative Analysis?
 Dictionary of Real Estate Appraisal 5th
Edition: “The process of accounting for

differences (such as between comparable
properties and the subject property) that are not
quantified; may be combined with quantitative
analysis.”
13th Edition: “In the sales comparison
approach, the process of accounting for
differences that are not quantified; usually
follows quantitative analysis.”
The Dictionary says Qualitative and
Quantitative can be combined.
Why?
 We often don’t have the time or
resources to fully develop the
statistical analysis required for a true
quantitative analysis.
 RPP – USPAP Scope of Work Rule says
the scope is acceptable when it
“meets or exceeds what an
appraiser’s peers’ actions would be”
The 13th Edition says that
qualitative usually follows
quantitative. Why?
 Comparing apples to apples.
 Sales aren’t perfect, they
frequently require reconciliation.
 The word “usually” recognizes
that they are not mutually
exclusive techniques.
Where do we use Qualitative
Analysis?
Selecting Sales
Area Analyses
Highest and Best Use
Subject physical Features
This session concentrates on how
qualitative analyses fit within the sales
comparison approach.
We will identify the strengths and
weaknesses of the methodology.
We will discuss overcoming or reducing
most of the weaknesses.
We will discuss the myths and
misunderstandings.
What are the weaknesses of
Qualitative Analyses in the
Sales Comparison Approach?
 Appears to be unsupported if
not reported well
 Reviewability
 May be misunderstood
 Under-recognized in practice
What are the strengths of a well done
Qualitative Analysis?
 Quality comparison of elements of
comparison
 Reflects market behavior
 Already used in every report to some
extent
 Easily understood if done well
 Limits the likelihood of a conclusion
outside the range of comparable sale
prices

Location Adjustment:
Which Location is better?
How much better (what
would the adjustment
be)?
How do you measure the
difference?
Lot Shape Adjustment:
Which Shape is better?
How much better (what
would the adjustment
be)?
How do you measure the
difference?
Improvement Quality Adjustment:
Which Quality is better?
How much better (what
would the adjustment
be)?
How do you measure the
difference?
Would you use the above
questions in qualitative or
quantitative analyses?
Research and analysis
requirements are no
different.
The depth of analysis and
information gathering is just
as cumbersome between
both methodologies.
USPAP appraisal reporting standards
(Standard 2) says nothing about
development.
They are separate functions.
Restricted, summary and self-contained
appraisal reports require the same
development.
All three require the same documentation,
information must be contained in the file.
Reporting
Qualitative
Analyses
Simple Inferior/superior
Example
Industrial buildings:
Subject: Average location, 4 doors
Sale 1 Good location, 6 doors
Sale 2 Average location, 4 doors
Sale 3 Fair location, 2 doors
Sale 1: $1,050,000
Sale 2: $1,000,000
Sale 3: $ 950,000
Superior
Similar
Inferior
Implied Adjustments:
Sale 1: -$50,000
Sale 2: $
0
Sale 3: $50,000
Which is more important, doors or
location?
To what proportion?
If location is more important, then the
implied adjustment for location is more
than $25,000.
This must be supported with market
evidence.
Refined Superior/Inferior
This technique involves using symbols to
indicate superior and inferior traits on a
table.
The table segregates different elements of
comparison.
Weighting can be shown with multiple
symbols of the same type, but care must
be taken to distinguish weight from
degree
SALE #
$/SF
MARKET
SIZE
LOCATION
APPEAL OVERALL
INDICATION
1
$56.11
1.01
>
<
>>
>>
$56.67
2
$116.36
1.02
>
<
<
<
$118.69
3
$33.36
1.03
>>
-
>
>>>
$34.36
4
$54.20
1.03
>
<
>
>
$55.83
5
$164.15
1.03
-
<
<
<<
$169.07
6
$159.33
1.05
-
<
<
<<
$167.30
7
$45.54
1.05
>>>
<
<
>
$47.82
8
$88.75
1.11
-
<
>>
>
$98.51
9
$66.70
1.13
>
<
>
>
$75.37
Narrative Superior/Inferior analyses
Describes in narrative the
development, analyses and
reasoning.
Explains weighting and reasoning
Explains why the element is superior
or inferior.
Demonstrates or describes trends
and differences.
Sale
Price/SF
Comments
$6.51
This sale is located in a busier area along the main road, is much larger than the
subject effective size, has similar access and retail potential, but is slightly
inferior due to the subject’s lack of competition. Overall, primarily due to the
size of the lot, the subject should be more valuable than $6.51 per square foot.
$7.00
This sale is located in the rear of the a business park, is much larger than the
subject effective size, has inferior access and retail potential, and is slightly
inferior due to the subject’s lack of competition. Overall, primarily due to the
size of the lot, the subject should be more valuable than $7.00 per square foot.
$7.84
This sale is located in the rear of the a business park, is much larger than the
subject effective size, has inferior access and retail potential, and is slightly
inferior due to the subject’s lack of competition. Overall, primarily due to the
size of the lot, the subject should be more valuable than $7.84 per square foot.
4
$8.00
This sale is located along a secondary road with some visibility from the
highway, is slightly smaller than the subject effective size, has similar access
but somewhat inferior retail potential, and is similar in visibility to the subject.
Overall the subject should be slightly more valuable than $8.00 per square foot.
Sub
$8.50
Best Fit for Subject
$9.00
This sale is located along a secondary road with some visibility from the
highway, is slightly smaller than the subject effective size, has similar access
but somewhat inferior retail potential, and is similar in visibility to the subject.
Overall the subject should be slightly less valuable than $9.00 per square foot.
1
3
2
5
When does qualitative analysis
become quantitative?
Most quantitative analysis includes
some qualitative analysis.
Most qualitative analysis requires
some quantitative analysis.
Weighted Average Method
The weighted average methodology is
much more detailed.
Much more quantitative in practice.
Developed to account for variances in
both weighting and degree.
Allows for scale selection
Allows for a range of weighting options.
Weighting
3
Element Location
1
Sale #
2
3
Subject
Grade
Total
Grade
Total
Grade
Total
Grade
Total
3
9
5
15
3
9
4
12
Size
Utilities
2
Topography
1
3
3
9
3
9
3
9
3
6
3
6
3
6
3
6
5
10
5
10
5
10
3
6
1
Shape
3
3
5
5
3
3
1
1
Total
Price/SF Price/Point
31
$ 17.65 $
0.5694
45
$ 25.65 $
0.5700
37
$ 21.00 $
0.5676
34
Indication
$ 19.38 $
0.5700
Timothy James Holzhauer, JD, MRICS, SR/WA
(505)474-3068
timtheappraiser@comcast.net