Understanding the Sales Comparison Approach in Real Estate Valuation

Very Easy Real Estate Investment Valuation Methods

As an investment analyst, you are evaluating various methods for valuing a real estate property. One common approach is the Sales Comparison Approach, which estimates a property's value based on the sale prices of comparable properties in the same area. This method is particularly useful in an active real estate market.

Which of the following statements best describes the Sales Comparison Approach?

It relies primarily on future earnings potential of the property.

It uses the sale prices of similar properties as a benchmark for valuation.

It focuses on the cost to rebuild the property minus depreciation.

Hint

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