What does the Sales Comparison Approach in an appraisal involve?

The Sales Comparison Approach in an appraisal is a method that focuses on comparing the subject property to similar properties that have recently sold in the same area. This approach assumes that the value of a property can be determined by looking at what other similar properties, often referred to as "comps," have sold for. By analyzing recent sales, an appraiser can establish a fair market value for the property in question based on current market conditions.

This approach is particularly effective in residential real estate markets where there are often many comparable properties available. The appraiser will typically adjust the sale prices of the comparable homes based on differences in features, condition, location, and other relevant factors to arrive at a value for the subject property.

The other options represent different aspects of the real estate and mortgage lending process but do not align with the concept of the Sales Comparison Approach. Evaluating historical sale prices looks backward rather than focusing on current market comparables. Conducting a financial assessment pertains to the buyer's ability to obtain a loan rather than property valuation. Assessing repair costs relates to the physical condition of the property, which is not the primary focus of the Sales Comparison Approach.