Sales comparison approach
The sales comparison approach is typically used when a property is owner-occupied and therefore does not generate income. Under this method, market value is derived by comparing the subject property with actual sale prices achieved for comparable properties.
The basis of comparison
Comparable properties should be as similar as possible to the property being valued. If market conditions have changed or if the properties differ in relevant characteristics, appropriate adjustments (premiums or discounts) are made. In addition, price movements in comparable areas are reflected through upward or downward adjustments. Typical factors include:
- Layout / floor plan
- Condition of the property
- Location (e.g. transport links)