What method would an appraiser likely use to determine whether a property's listed price is justified based on ongoing market sales?

The Sales Comparison Approach is the method an appraiser would use to determine if a property's listed price is justified by comparing it to similar properties that have recently sold in the same market area. This approach relies on the principle of substitution, which states that a buyer will not pay more for a property than the cost to acquire a comparable one.

In this approach, the appraiser collects data on recently sold properties that are comparable in size, location, amenities, and condition to the subject property. By analyzing these comparable sales, the appraiser can make adjustments to account for differences, such as square footage, number of bedrooms or bathrooms, and any unique features of the properties. This method is particularly relevant in active real estate markets where finding similar properties for comparison is feasible.

While the Cost Approach considers the value of the land plus the cost of building improvements, and the Income Approach focuses on properties that generate income, neither of these directly assesses market demand or pricing through recent sales. Direct Capitalization, a concept primarily used in commercial real estate, evaluates potential income rather than market comparison. Therefore, the Sales Comparison Approach provides the most relevant and accurate method for assessing a property's market value based on actual sales data.