In the sales comparison approach, what is a “comparable”?

In the sales comparison approach, a "comparable" refers to a similar property that has been recently sold and is used as a benchmark for valuing another property. This method relies on the principle of substitution, which states that a buyer would not pay more for a property than the cost of acquiring an equally desirable and similar property.

By analyzing the sale prices of comparables, appraisers can derive a fair market value for the subject property by making adjustments for differences in features, location, and condition. This process ensures that the valuation reflects current market conditions and the unique characteristics of the property being appraised.

In contrast, the other choices do not accurately capture the definition or application of a "comparable" in this context. A property that has been appraised recently may not necessarily align in features or market context; a property currently on the market does not provide historical sale data necessary for the comparison; and a property that has been renovated may not be similar enough to the subject property to ensure a valid comparison. Thus, the definition provided in the correct answer clearly aligns with the fundamental principles of the sales comparison approach in real estate appraisal.