Which type of appraisal approach uses recent sales data of similar properties?

The sales comparison approach is based primarily on analyzing recent sales data of similar properties, also known as comparables or "comps." This approach is particularly effective in residential appraisals and is grounded in the principle of substitution, which states that a buyer would not pay more for a property than what it would cost to purchase an equivalent one.

In utilizing this approach, appraisers look at homes or properties that have sold in the same area that are comparable in terms of size, condition, location, and features. By adjusting the sale prices of these comparable properties to account for differences, the appraiser can derive an estimated value for the subject property.

The other approaches mentioned do not primarily rely on recent sales data from comparable properties. The cost approach estimates value based on the cost to replace or reproduce the improvements on the property, minus any depreciation. The income approach is focused on the income-generating potential of a property, often used for commercial real estate, where income and expenses play a crucial role in determining value. The market value approach is more of a conceptual term rather than a distinct appraisal method and can involve multiple methodologies, including aspects of the sales comparison, cost, and income approaches. Thus, the sales comparison approach distinctly emphasizes the utilization of