What does “adjustment” refer to in the sales comparison approach?

In the sales comparison approach, "adjustment" specifically refers to the modification of sale prices of comparables to account for differences compared to the subject property. This process is essential for accurately assessing the value of a property being appraised by comparing it to similar properties that have been sold recently, known as comparables or comps.

When appraisers identify comparables, they analyze their sale prices and then make adjustments based on various factors that may affect value. These factors can include differences in location, size, condition, age, amenities, and other features. For example, if a comparable property has a swimming pool and the subject property does not, the appraiser would decrease the sale price of the comparable property to account for this difference, reflecting that a buyer would typically pay more for a property with a pool.

The goal of these adjustments is to arrive at a more precise estimate of the subject property's market value by ensuring that the comparison is as fair and accurate as possible. Thus, the adjustments are critical to aligning the comparables with the unique attributes of the property being appraised.