In the sales comparison approach, each comparable sale _______.

• A. Will produce its own indicated value
• B. Is adjusted to a common basis
• C. Contributes equally to final value
• D. Is ignored if below market value

Answer: (A)

In the sales comparison approach, each comparable sale yields an indicated value for the subject property. You start with the sale price of each comparable and make adjustments for differences between the subject and the comp—in areas like size, age, condition, features, location, and terms of sale. These adjustments convert the comp’s price into an indication of what the subject would be worth, given that comp’s similarities and differences. After obtaining an indicated value from each comparable, you reconcile the values to arrive at a final estimate. So the key idea is that every comparable provides its own indication of the subject’s value once adjustments are applied.