Glossary of Terms
The sales comparison approach is a valuation method in which an appraiser analyzes recently sold properties similar to the subject and adjusts for differences to arrive at an indicated value. It is the most widely used of the three recognized approaches to value and the primary method in most residential appraisals.
Rooted in the principle of substitution, it reflects the idea that a rational buyer will not pay more for a property than the cost of acquiring a comparable alternative. Appraisers select comparable sales based on proximity, similarity and market relevance, then apply market-supported adjustments for meaningful differences.
Comp selection and adjustment quality are among the most scrutinized elements in appraisal review, making clear and well-supported reasoning essential to a defensible conclusion.