Which approach to value estimation focuses primarily on comparing similar properties?

The Sales Comparison Approach focuses primarily on comparing similar properties to estimate value. This method assesses the market value of a property by analyzing the sale prices of comparable properties, often referred to as "comps," that have recently sold in the same area.

This approach operates on the principle of substitution, which asserts that a buyer will not pay more for a property than what it would cost to purchase a similar one in the same market. By evaluating the sale prices of these comparable properties and making adjustments for differences such as size, features, and condition, an appraiser can arrive at a reasonable estimate of the subject property's value.

This method is particularly effective in residential real estate, where properties are often quite similar in terms of design and location, and it reflects current market conditions, providing a relevant basis for value estimation.

In contrast, the Cost Approach focuses on determining the cost to replace or reproduce a property and is more relevant in situations with unique properties or new construction. The Income Approach is typically used for investment properties, concentrating on the income-generating potential rather than direct comparisons with other properties. Lastly, the Market Value Approach is a broader term that encompasses various methods of valuing properties, including the Sales Comparison, Cost, and Income Approaches,