What is another term for the market approach in real estate appraisal?

The market approach in real estate appraisal is commonly referred to as the sales comparison approach. This method estimates the value of a property by comparing it to similar properties that have recently sold in the same area. The principle behind this approach is that a property's value can be gauged based on the actual sale prices of comparable properties, making it particularly relevant in active and well-defined real estate markets.

The sales comparison approach relies on the premise that similar properties should sell for similar prices under normal market conditions. Appraisers examine various factors such as location, size, condition, and features of the properties involved in the comparison. Adjustments are then made to account for differences between the subject property and the comparable sales to arrive at a fair market value.

This approach is widely used for residential properties, where there is usually enough transaction data available for accurate comparisons. It stands out because it reflects the preferences of buyers and sellers active in the market, resulting in a value that aligns closely with current market conditions.