What is the primary focus of the Sales Comparison Approach in appraisals?

What is the primary focus of the Sales Comparison Approach in appraisals?

• A. Analyzing the costs of building a property
• B. Comparing similar properties that have been sold
• C. Estimating income potential from the property
• D. Finding the historical value of the property

Answer: (B)

The primary focus of the Sales Comparison Approach in appraisals is to compare similar properties that have been sold. This method involves analyzing recent sales of comparable properties in the same market area to determine the value of the subject property. The idea is that the market value of a property can be gauged through the prices that similar properties have recently sold for, adjusting for differences in features, size, location, and condition. This approach is particularly effective for residential properties, where there are typically many recent sales available for comparison. Other methods, such as analyzing costs or estimating income potential, play important roles in different contexts but do not encapsulate the essence of the Sales Comparison Approach. By focusing on actual transaction data, this method captures the current market dynamics more accurately, making it a preferred choice among appraisers when sufficient comparable sales data exists.

The primary focus of the Sales Comparison Approach in appraisals is to compare similar properties that have been sold. This method involves analyzing recent sales of comparable properties in the same market area to determine the value of the subject property. The idea is that the market value of a property can be gauged through the prices that similar properties have recently sold for, adjusting for differences in features, size, location, and condition. This approach is particularly effective for residential properties, where there are typically many recent sales available for comparison.

Other methods, such as analyzing costs or estimating income potential, play important roles in different contexts but do not encapsulate the essence of the Sales Comparison Approach. By focusing on actual transaction data, this method captures the current market dynamics more accurately, making it a preferred choice among appraisers when sufficient comparable sales data exists.