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Simple English definitions for legal terms
comparative-sales approach
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A quick definition of comparative-sales approach:
The comparative-sales approach is a way of figuring out how much a piece of real estate is worth. It involves looking at other similar properties that have recently sold and making adjustments for any differences between them, like location or size. This helps determine a fair price for the property being appraised. It's also called the market approach or market-comparison approach.
A more thorough explanation:
The comparative-sales approach is a method used to appraise real property by comparing it to similar properties that have recently been sold in the market. This approach is also known as the market approach or market-comparison approach.
When using the comparative-sales approach, an appraiser will look at properties that are similar to the one being appraised in terms of location, size, and other relevant factors. The appraiser will then make adjustments for any differences between the properties, such as the dates of sale or any unique features that may affect the value.
For example, if a three-bedroom house in a particular neighborhood recently sold for $300,000, an appraiser might use that sale as a basis for appraising a similar three-bedroom house in the same neighborhood. If the house being appraised has a larger yard or a more updated kitchen, the appraiser might adjust the value accordingly.
The comparative-sales approach is one of three common methods used to appraise real property, along with the cost approach and income approach. It is often used for residential properties, but can also be used for commercial properties.