Sales comparison approach
National Real Estate Exam glossary · Valuation
Definition
A method of appraisal that estimates value by comparing the subject property with recently sold, similar properties and adjusting the prices of those comparables for differences. The governing rule is to adjust the comparable, never the subject: if the comparable is better, subtract; if it is inferior, add (CBS / CIA). It is the most persuasive approach for residential property.
Sales comparison approach in plain English
The sales comparison approach figures out what a home is worth by looking at what similar nearby homes actually just sold for, then fine-tuning for the differences. The one rule you must never flip: you always adjust the comparable house's price, never the house you're pricing. If the comparable is nicer than your subject (say it has a pool yours lacks), you subtract to bring it down; if it's worse, you add. Think of pricing your used phone by checking what the exact same model sold for and then knocking off a bit because that one had a better case — this is the most trusted method for regular homes because it reflects what real buyers really paid.
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