Sales Comparison Approach: Assessing Real Estate Comps

Abstract

Let's get started! What Is The Sales Comparison Approach? The sales comparison approach is a back-of-the-napkin approach to real estate appraisal that compares one property to a selection of comparable properties that recently sold in the same area. The value of these comparable properties, or "Comps," is then adjusted for various factors to obtain an average price per square foot. Without comparing properties in the same geographic area, there would be no way to determine a property's value. Property Characteristics Used In An SCA There are any number of property characteristics that might become important when using the sales comparison approach. Take an average of your comps' price per square foot, and multiply that by your actual property's square footage to get an estimated value. A comp's value is determined by two things: the property itself and the neighborhood. You need to account for all the property's features, and do your due diligence when finding comparable properties.