In the context of property valuation, what does the term "comparable properties" refer to?

The term "comparable properties" refers to properties that have similar features and have sold recently. This concept is crucial in property valuation, especially when determining the market value of a property during an appraisal or comparative market analysis. By examining comparable properties, appraisers and real estate professionals can assess the price of a subject property in relation to similar properties, which helps establish a fair market value.

The comparison usually considers aspects such as location, size, age, condition, and amenities. This methodology relies on recent sale data to ensure relevance and accuracy, as market conditions can change over time. Using this approach, professionals can make informed decisions based on real-time market activity and neighborhood trends.

Other options do not fit the definition of comparable properties. For instance, properties that are undervalued may not accurately represent the market and could lead to misleading conclusions. Properties located in different geographical areas would not provide a reliable comparison since market dynamics can vary greatly across locations. Similarly, properties listed on the market may not reflect actual sale prices, as listings could be above or below fair market value.