What type of properties does the Sales Comparison Approach use as a benchmark for valuation?

The Sales Comparison Approach utilizes sold properties in similar locations as a benchmark for valuation because it relies on the principle of substituted value. This principle posits that a property’s value can be determined by comparing it to similar properties that have recently sold, thereby establishing a market value based on real transactional data.

By selecting comparable properties (often referred to as "comps"), appraisers can analyze features such as size, condition, location, and amenities to accurately estimate the value of the subject property. This method is particularly effective in residential real estate markets, where there are usually enough comparable sales to provide a reliable valuation.

The other options, while important in other contexts, do not align with the core methodology of the Sales Comparison Approach. Income-producing properties might require different analytical techniques, such as the Income Approach, which focuses on potential earnings. Properties recently appraised may not necessarily reflect current market conditions and can also involve subjective factors. New construction properties may not have adequate sold comparables to derive value from, which can make them difficult to evaluate using this approach.