Comparative analysis is a method that uses

Comparative analysis is a method that uses

• A. A method based on the replacement cost of improvements.
• B. An income approach using stabilized net income.
• C. A method using the selling prices of similar properties as the basis for estimating value.
• D. A method based on tax assessed value.

Answer: (C)

The main idea is to estimate value by looking at what similar properties have sold for. In comparative analysis, you examine recently sold properties that are alike in key ways—size, layout, style, age, condition, and neighborhood—and use their selling prices as a basis to judge what the subject property should fetch. You then adjust for differences between the subject and the comparables (for example, if the subject has an extra bedroom or a newer roof, you tweak the value up or down accordingly). This approach rests on the market data principle that buyers won’t pay more for a property than the price of similar properties that have recently sold. This differs from other methods: replacing the building’s cost to determine value is the replacement cost approach, which focuses on construction costs rather than market prices; the income approach uses anticipated net income and capitalization to estimate value, typically for investment properties; and assessed value is determined by tax authorities for taxation, not necessarily reflecting current market conditions.

The main idea is to estimate value by looking at what similar properties have sold for. In comparative analysis, you examine recently sold properties that are alike in key ways—size, layout, style, age, condition, and neighborhood—and use their selling prices as a basis to judge what the subject property should fetch. You then adjust for differences between the subject and the comparables (for example, if the subject has an extra bedroom or a newer roof, you tweak the value up or down accordingly). This approach rests on the market data principle that buyers won’t pay more for a property than the price of similar properties that have recently sold.

This differs from other methods: replacing the building’s cost to determine value is the replacement cost approach, which focuses on construction costs rather than market prices; the income approach uses anticipated net income and capitalization to estimate value, typically for investment properties; and assessed value is determined by tax authorities for taxation, not necessarily reflecting current market conditions.