Final answer:
The sales comparison approach involves collecting data on comparable properties, adjusting their sale prices, and then using these comparables to estimate the value of the subject property.
Step-by-step explanation:
The sales comparison approach requires an appraiser to collect data on similar properties that have recently sold in the same geographic area as the subject property.
The appraiser must then analyze and adjust the sale prices of these comparable properties (often referred to as "comps") to account for differences between the comps and the subject property. Factors such as location, size, condition, and features are considered in these adjustments to determine an estimated value of the subject property.
For example, an appraiser might check the Real Estate section in the local newspaper and record the sale prices for 35 randomly selected homes that were recently listed in the county.
This provides a broad dataset from which the appraiser can select the most relevant comps to compare to the subject property. The final value is estimated by comparing these adjusted sale prices.