In the sales comparison approach, what do "comparable sales" refer to?

In the sales comparison approach, "comparable sales" specifically refer to recently sold properties that are similar to the subject property being appraised. This method is widely used in the real estate appraisal process as it relies on the principle of substitution, which suggests that a buyer would not pay more for a property than they would for a similar one in the same area.

To effectively determine the value of the subject property, appraisers look for properties that are comparable in terms of characteristics such as location, size, style, age, and condition, and that have sold in a recent time frame. The use of comparable sales helps ensure that the appraisal reflects current market conditions and the actual buying practices of typical purchasers in that market.

The focus on recent sales is crucial because real estate values can fluctuate over time, and using outdated information might not accurately represent the property's current market value. Therefore, "recently sold properties similar to the subject property" is the most accurate definition of "comparable sales" in the context of the sales comparison approach.