Which type of appraisal technique commonly involves examining sales of similar properties?

The sales comparison approach is a widely used appraisal technique that directly compares a property with similar properties that have recently sold in the same area. This method is grounded in the principle of substitution, which suggests that a buyer would not pay more for a property than they would for a comparable one.

In this approach, appraisers analyze the sale prices of similar properties and adjust for differences in features such as size, condition, location, and amenities. This provides a clear market value based on what buyers are willing to pay for properties with comparable characteristics.

Other appraisal techniques, such as the income approach and the cost approach, do not focus primarily on direct comparisons with similar sold properties. The income approach assesses the value of a property based on the income it generates, while the cost approach determines value based on the cost to replace the property minus depreciation. Qualitative analysis is more subjective and involves assessing non-quantifiable factors rather than direct market comparisons. Therefore, the sales comparison approach stands out as the method that primarily involves examining sales of similar properties to establish value.