Which approach values a property by comparing it to similar properties that have recently sold?

Which approach values a property by comparing it to similar properties that have recently sold?

• A. The Income Approach
• B. The Direct Comparison Approach
• C. The Cost Approach
• D. The Principle of Anticipation

Answer: (B)

Value is derived by looking at what similar properties have sold for recently. This approach, often called the Sales Comparison or Direct Comparison Approach, uses actual market transactions of comparable homes and makes adjustments for differences in size, features, condition, and location to estimate the value of the subject property. It mirrors how buyers in the real market determine worth by examining recent sale prices of comparable properties. The other methods don’t fit this question as their focus is different: the Income Approach values property based on potential rental income and operating expenses; the Cost Approach estimates value from the cost to replace or reproduce the property minus depreciation; and the Principle of Anticipation is a general idea that value comes from expected future benefits, not a specific valuation method.

Value is derived by looking at what similar properties have sold for recently. This approach, often called the Sales Comparison or Direct Comparison Approach, uses actual market transactions of comparable homes and makes adjustments for differences in size, features, condition, and location to estimate the value of the subject property. It mirrors how buyers in the real market determine worth by examining recent sale prices of comparable properties.

The other methods don’t fit this question as their focus is different: the Income Approach values property based on potential rental income and operating expenses; the Cost Approach estimates value from the cost to replace or reproduce the property minus depreciation; and the Principle of Anticipation is a general idea that value comes from expected future benefits, not a specific valuation method.