Why is it not a good idea to use standard pre-printed residential sales comparison grids in commercial appraisal reports?

• A. Residential grids are too simple for commercial use.
• B. Residential grids are not used in any appraisals.
• C. Many of the elements of comparison on residential grids are not typical value-related elements for commercial properties.
• D. Commercial properties use identical comparison grids to residential.

Answer: (C)

In the Sales Comparison Approach, the grid you use to compare properties must reflect the factors that actually drive value for that property type. For commercial properties, value is driven mainly by income and expenses—net operating income, vacancy and credit loss, operating expenses, cap rate, and lease terms—along with market rent and other financial considerations. A standard pre-printed residential grid centers on dwelling-related attributes (physical features like bedrooms, baths, lot size, age, condition) that are not the primary value drivers for commercial properties. If you force a residential grid onto a commercial property, you miss the key financial data and comparisons that determine value, and you may include or omit elements that mislead the analysis. So, you use a grid tailored to commercial data rather than a residential one. The other options aren’t correct because commercial appraisals do use grids, and they do not use identical grids to residential—there is a fundamental difference in what drives value.