What does the sales comparison approach rely on to estimate market value?

What does the sales comparison approach rely on to estimate market value?

• A. Current inventory levels in the market.
• B. Appraised value of the subject property.
• C. Recent sales of comparable properties.
• D. Replacement cost of the building.

Answer: (C)

The sales comparison approach estimates market value by using actual market transactions of similar properties. It relies on recent sales of comparable properties in the same area to gauge what buyers are currently willing to pay. By identifying properties that are materially similar to the subject and making adjustments for differences in features, size, condition, and exact location, as well as for how much time has passed since those sales, the method derives a value range for the subject. This approach is grounded in real buyer behavior and current market conditions, which is why recent comps provide the most direct evidence of value. Current inventory levels reflect supply conditions, not the price buyers are willing to pay. The appraised value of the subject can come from multiple approaches, and replacement cost is used in the cost approach, not the sales comparison method.

The sales comparison approach estimates market value by using actual market transactions of similar properties. It relies on recent sales of comparable properties in the same area to gauge what buyers are currently willing to pay. By identifying properties that are materially similar to the subject and making adjustments for differences in features, size, condition, and exact location, as well as for how much time has passed since those sales, the method derives a value range for the subject. This approach is grounded in real buyer behavior and current market conditions, which is why recent comps provide the most direct evidence of value.

Current inventory levels reflect supply conditions, not the price buyers are willing to pay. The appraised value of the subject can come from multiple approaches, and replacement cost is used in the cost approach, not the sales comparison method.