Which appraisal method compares similar properties that have recently sold?

The Sales Comparison Approach is grounded in the principle of substitution, which posits that a property's value is determined by the sale prices of similar properties (known as comparables) in the same area. This method involves analyzing the recent sales of properties that are alike in terms of size, location, and characteristics to establish a market value for the subject property.

By comparing these similar properties, appraisers can adjust for differences in features such as the number of bedrooms, bathrooms, or the condition of the home. The process helps to ensure that the estimated value reflects the current market conditions, making it a widely used and reliable method, particularly in residential appraisals.

In the context of real estate valuation, the Sales Comparison Approach is especially effective since it closely mirrors the dynamics of the market, providing a tangible basis for valuation that prospective buyers and sellers experience first-hand.