In the sales comparison approach, adjustments are based on what?

In the sales comparison approach, adjustments are fundamentally based on the market reflection of observed differences. This method evaluates the value of a property by comparing it to similar properties that have recently sold in the same area. The adjustments made are intended to account for differences between the properties being compared, such as size, location, condition, and features.

When appraisers analyze recent sales, they observe the characteristics of similar properties and how these features may have affected their selling prices. For instance, if one property has an additional bathroom compared to a comparable sale, the appraiser will adjust the value of the comparable sale upwards to reflect this added feature. These adjustments are not arbitrary; they rely on market data to ensure that they align with current buyer behavior and market trends. This reliance on actual market reflections makes the sales comparison approach a widely accepted method for determining property value.

While historical sales data, expert opinions, and the condition of the property do play a role in the appraisal process, they serve as supporting factors rather than the primary basis for adjustments within the sales comparison approach. Adjustments must be grounded in current market conditions to provide an accurate and fair assessment of property value.