What does the sales comparison approach estimate?

The sales comparison approach estimates value by comparing a property to similar properties that have recently sold in the same area. This method is widely used in real estate appraisal because it reflects the current market conditions and provides a reliable estimate based on actual sales data. By analyzing the sale prices of comparable properties (often referred to as "comps"), appraisers can determine a fair market value for the property in question. Adjustments are often made for differences in features, size, location, and amenities to ensure the comparison is as accurate as possible. This approach is particularly effective in active markets where many similar properties are available for sale, allowing for a robust data set to draw upon.