What is the sales comparison or market approach in property appraisal used for?

The sales comparison or market approach in property appraisal is primarily focused on determining the value of a property based on the sale prices of similar properties, often referred to as "comparables" or "comps." This approach involves analyzing recent sales data of properties that are alike in key characteristics, such as size, location, condition, and features. By comparing these properties, appraisers can establish a market-driven value for the subject property that reflects current real estate market conditions.

Specifically, the market approach is particularly useful in residential property appraisals, as it takes into account the dynamics of supply and demand in a specific area, allowing for a more accurate and fair assessment of value. Given this context, the other options do not align with the primary purpose of the sales comparison approach. For example, estimating a property’s income-generating capacity pertains to the income approach, while calculating replacement costs is related to the cost approach. Assessing improvements and renovations is more related to property condition rather than direct value comparison with similar properties.