Direct answer
What does sales comparison approach mean?
The sales comparison approach is a valuation approach that compares the subject property with relevant sales and adjusts for differences.
Exam cue: Adjust comparable evidence to reflect how market participants respond to differences.
What does it look like in a question?
Example
An appraiser reconciles several adjusted sales to estimate the subject's value.
Common exam trap
What should you not confuse it with?
The method does not simply average every nearby sale.
Related valuation terms
AppraisalAn appraisal is an opinion of value developed by a qualified appraiser for an identified use, property interest and effective date.CapitalizationCapitalization is the process of converting income into an indication of value.ComparableA comparable is a property used as market evidence because it is sufficiently similar to the property being analyzed.Comparative market analysisA comparative market analysis (CMA) is a broker's analysis of relevant market data to help a seller or buyer consider a probable price range.Cost approachThe cost approach is a valuation approach that adds land value to the depreciated cost of the improvements.DepreciationDepreciation is a loss in property value from physical deterioration, functional obsolescence or external obsolescence in appraisal.
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