What is one consideration an appraiser must take into account when using the sales comparison approach?

In the sales comparison approach, an appraiser evaluates the value of a property by examining the sale prices of similar properties in the area. One key consideration is the age and condition of nearby properties. These factors significantly influence property values because they affect the attractiveness and marketability of a property.

For instance, if a comparable property is much older or has not been well maintained, it may sell for less than newer or better-maintained homes in the vicinity. Similarly, if an appraiser is comparing a property to others that are in excellent condition versus those in poor condition, this will need to be accounted for in the valuation to ensure an accurate and fair market estimate.

The seller’s motivations and current economic trends, while impactful in assessing the overall market dynamics, are less directly relevant in the sales comparison approach itself than the physical characteristics of comparable properties. Historical sales data provides context for trends but must be complemented with current factors like age and condition to ensure an accurate and contemporary assessment.