Today's Real Estate Term is Sales Comparison Approach.
The sales comparison approach to value is utilized by real estate appraisers when estimating the value of a particular property. This approach is considered the most reliable indicator of the market and is the primary method used by real estate appraisers. This approach to value compares similar properties that have sold recently to the property being appraised, which is called the Subject Property. It is preferable to use properties for comparison that are similar in size, age and appeal to the subject property.
The sold properties that are selected to compare to the subject property are called Comparables. The selection of which properties to use is as comparables is an important aspect of the appraisal process.
Some of the comparative features that appraisers consider when selecting comparable properties are:
Property rights appraised
Conditions of the sale
Financing Terms
Market Conditions
Motivation of buyers and sellers
Location
View
Size and utility of the land
Physical features
Quality of construction
Size and functionality of the improvements
Age or Effective Age of the improvements
Condition of the property
Design or Style of the property
Appeal of the property
Amenities
Zoning
After comparing each sale to the subject property and making dollar and/or percentage adjustments to individual features the appraiser will have an adjusted sale price for each comparable. These adjusted sales prices are evaluated and weighted and provide the appraiser with a basis for estimating the value of the subject property.
Other approaches to value utilized by real estate appraisers include the Cost approach and the Income approach.
Real Estate Terminology provided by David Miller Realty.
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