Which appraisal method compares a property to similar recently sold properties?

The sales comparison approach is a widely used appraisal method that directly evaluates a property's value by comparing it to similar properties that have recently sold in the same area. This method operates on the premise that a property's worth can be determined by the sale prices of comparable properties, often referred to as "comps."

In this approach, an appraiser identifies properties with similar characteristics such as size, location, age, and features. They analyze the sale prices of these comparable properties and make adjustments for differences to arrive at a fair market value for the subject property. The data for this method is often derived from Multiple Listing Service (MLS) databases, public records, or recent sales data.

The effectiveness of the sales comparison approach relies heavily on the availability of recent sales data and the closeness of the comparables in terms of characteristics and location. When there is ample comparable sales data, this approach can provide a reliable estimate of value, reflecting the market trends and buyer behavior.

Understanding this method is crucial for real estate professionals as it provides insights into market conditions, property values, and helps in setting competitive prices for listings.