The sales comparison approach is the foundation for the real estate professional's cma, comparative market analysisit is a process used to determine the current market value of a property based on recent sales of comparable properties in the area. The sales comparison approach is a real estate appraisal method that compares a piece of property to other properties with similar characteristics that have been sold recently the method takes into account the effect that individual features have on the overall property value. Real estate appraisal is not only important to property buyers but also have great influence on the decision making process for other parties, such as the real estate agencies, financing departments, insurance company and the government.
Start studying real estate appraisal: chapter 9 sales comparison approach to value learn vocabulary, terms, and more with flashcards, games, and other study tools. This type of appraisal is more technical and often lengthier than residential appraisals when purchasing either a commercial or residential property, a real estate appraisal is a standard procedure, enabling both parties in the real estate transaction to understand the fair market value of the property in question.
The concept of a real estate market is central to the sales comparison approach a real estate market is a distinct group of buyers and sellers whose actions are influenced in similar ways by similar forces of supply and demand. The appraisal defined professional real estate appraisers perform a useful function in society and offer a variety of services to application of the approaches to value cost sales comparison income capitalization reconciliation of value indications and final opinion of value report of defined value. Real estate standards for the appraisal profession are set forth in the uniform standards of professional appraisal practice (uspap) developed by the appraisal standards board of the appraisal foundation uspap specifies the procedures to be followed in developing and communicating an appraisal and the ethical rules for appraisal practice.
The appraiser's analysis and comparison of the results of all three appraisal approaches an appraiser has been hired to prepare an appraisal on a property that includes an elegant old mansion that is now used as an insurance company office. Appraisal reports are used by businesses, government agencies, individuals, investors and mortgage companies when making decisions regarding real estate transactions.
Sales comparison cost approach income approach not every property's market value can be determined by all 3 approaches usually, there will be a best method, but the other methods may narrow the range of the estimated market value a real estate appraisal is an independent estimate of the value of a parcel of real estate by an appraiser.
Three approaches to value are used by appraisers to determine market value of property: the cost approach, the income approach and the sales comparison approach the cost approach is the most complex while the sales comparison approach is most widely used to value resale property in a a residential real estate market.
There are three ways to determine the value of real estate, and each plays a part in property appraisal the most widely-used and accepted in residential practice is the sales comparison approachthis approach bases its opinion of value on what similar properties in the vicinity have sold for recently, with appropriate adjustments for time, acreage, living area, amenities and so on. Usually, the real estate appraiser has the opportunity to reach 3 levels of certification: appraisal trainee, licensed appraiser and certified appraiser the second and third levels of license require no less than 2000 experience hours in 12 months and 2500 experience hours in no less than 24 months respectively. The income capitalization approach to appraisal is widely considered to be an excellent benchmark by which real estate investors can assess the attractiveness of a property according to their own.