What is the significance of “time adjustments” in the sales comparison approach?

The significance of “time adjustments” in the sales comparison approach lies in their ability to account for changes in market conditions that affect prices over time. The real estate market is dynamic, and property values can fluctuate due to various factors such as economic shifts, interest rates, and changes in supply and demand.

When appraisers conduct a sales comparison analysis, they look at recent sales of comparable properties to determine the value of the subject property. However, if the comparable sales occurred at different times, it is essential to adjust for the time difference to ensure that the comparisons are meaningful and accurate.

Time adjustments involve analyzing how much the market has appreciated or depreciated since the date of the comparable sales. By incorporating these adjustments, an appraiser can effectively align the past sales data with current market conditions, thus arriving at a more accurate estimate of the subject property's value. This ensures that the appraisal reflects the true current market environment rather than outdated information.