The sales comparison approach

Compare substitutes

The sales comparison approach estimates value from verified sales of similar properties. Its foundation is substitution: a buyer normally will not pay more than the cost of a comparable substitute with similar utility. It is especially useful for homes and vacant lots when reliable comparable sales exist; unique properties may lack sufficient evidence.

Identify the subject, property rights, and effective date. Select sales competing in the subject's market, considering location, use, size, condition, amenities, sale date, financing, and transaction circumstances. Proximity alone does not establish comparability. Closed sales document transactions; listings show asking prices.

Adjust the comparable, not the subject

Ask what each comparable would have sold for with the subject's characteristics. Subtract for a superior comparable; add for an inferior comparable. Base amounts on market reaction, not necessarily construction cost. Paired sales differing mainly in one feature can help isolate its contribution.

A comparable sold for $300,000. Its garage is superior by $20,000, but its condition is inferior by $10,000. The calculation is $300,000 − $20,000 + $10,000 = $290,000, an adjusted indication for the subject.

Analyze financing concessions, unusual sale conditions, and changes in market prices between the sale date and effective date. Time adjustments concern the market, not simply building age. Reconcile the adjusted indications by weighing reliability, similarity, and support for adjustments. A mechanical average can conceal weak evidence.

Florida tax valuation context

Fla. Stat. § 193.011 requires consideration of present cash value in an arm's-length transaction and factors including use, location, size, cost, condition, and income. It addresses atypical financing and excludes household furnishings and other personal property from sale proceeds used in just valuation. These tax assessment requirements are not a mandatory adjustment formula for every private appraisal.