Sales comparison approach
The main way homes are appraised: comparing the property to recent similar sales and adjusting for differences.
Also called: market approach, market data approach
Related terms
Recently sold homes near the subject property that are similar in size, age, and features. Appraisers and agents use them to estimate value.
Dollar amounts an appraiser adds to or subtracts from a comp's price to account for differences like an extra bedroom, a garage, or a pool.
Valuing a property by estimating land value plus what it would cost to rebuild the structure, minus wear and age. It is most useful for new or unusual buildings.
Valuing a property based on the income it produces, often by dividing net operating income by a cap rate. It is used mainly for rentals and commercial property.
A licensed appraiser's professional opinion of what a home is worth. Lenders require one to make sure the home supports the loan amount.