Question

Appraiser Louis finds a property located in the same neighborhood as the appraised property, and wants to use it as a comparable sale. The comparable has more bedrooms than the subject, one less bath, and one less garage. The appraiser will have to subtract the extra bedrooms from the comparable, add a bathroom to the comparable, and add a garage to make the properties equal. What type of approach to value has Louis utilized?

Answer 1

Answer:

The approach to value that Louis has utilized is the Sales Comparison Approach.

Explanation:

Sales Comparison Approach allows appraisers to state an approximate value of a property they are selling by comparing the object property with similar properties, called comparable sales. The sale prices of the properties that are considered more comparable help to find a range for the approximate value for the property on sale. The Cost approach basically analyzes the price that the market can set for a property according to the construction or depreciation thereof. The Income Capitalization Approach primarily examines the future profits the property may generate. That’s why it is evident that appraiser Louis is using the Sales Comparison Approach.