What appraisal method estimates the value of a property by comparing it to similar properties in the same market area?

The sales comparison approach is a method used to estimate the value of a property by comparing it to similar properties—often referred to as "comps"—that have recently sold in the same market area. This approach operates on the principle that the value of a property can be determined by looking at what similar properties are selling for, assuming that the market conditions are comparable.

In applying the sales comparison approach, appraisers consider various factors such as location, size, amenities, and condition of the comparable properties to make adjustments for differences. This method is especially useful in residential real estate markets where there are many similar properties to compare against.

The other appraisal methods, while valuable in their own contexts, serve different purposes. The cost approach focuses on calculating the cost to replace or reproduce the property minus depreciation, which is beneficial in specialized properties where comparables are scarce. The income approach is used primarily for investment properties, assessing value based on the income they generate. Market analysis, while it can involve comparisons, is a broader assessment of market trends and conditions rather than a direct appraisal method.

This context helps clarify why the sales comparison approach is the correct method for determining property value through comparison with similar properties in the same market area.