To begin with, the sales comparison approach (also called the direct comparison, sales, or
market approach) is based on the principles of substitution. It is a process that collects
sales of comparable properties that occurred about the same time as the date of value, and
compares them to the property being analyzed. The sales comparison approach consists
of four steps:
1. research the sale
2. analyze the sale
3. adjust the sales for differences between the sales and the subject property
4. arrive at a value estimate
Several concepts or ideas are central to the sales comparison approach. These concepts
are described as:
• The importance of substitution
• The simplicity of market comparison
• The relationship to statistics
• The relevance of adjustments
• The significance of market data
What adjustments indicate?
Answering the question, the adjustment techniques used in the sales comparison approach
enable the appraiser to specifically identify the differences that are important in a given
