In the context of real estate appraisal, what does the term "comparable properties" refer to?

The term "comparable properties" refers specifically to similar properties that have recently sold. In real estate appraisal, appraisers use comparable properties to estimate the value of a subject property by analyzing sales data from these similar properties. The key attributes considered include location, size, age, condition, and amenities, among others. By comparing the subject property to these recently sold comparables, an appraiser can establish a market value that reflects current market conditions and buyer preferences.

Using comparable sales helps ensure that the valuation is supported by actual market activity, lending credibility to the appraisal. This approach is fundamental because the principle of substitution suggests that a buyer will not pay more for a property than they would for a similar one, thereby anchoring property values relative to recent transactions in the area.

Other options present various aspects unrelated to the definition of comparable properties. Properties in different neighborhoods may not provide a valid basis for comparison due to differing market conditions. Similarly, all properties in a given city could be vastly different, lacking the similarity needed for a meaningful appraisal comparison. Lastly, properties owned by the same client do not inherently qualify as comparable unless they meet the essential criteria of similarity and recent sales data.