Which statement is FALSE regarding the sales comparison approach?

• A. The approach uses only local data and excludes broader market data.
• B. It relies on comparable sales data from the market area.
• C. Adjustments are made for differences between properties.
• D. It may incorporate market conditions data when appropriate.

Answer: (C)

In the sales comparison approach, pricing is derived by examining recent sales of similar properties in the market and adjusting for differences to reflect the subject property’s features and conditions, while also considering current market conditions when appropriate.

The claim that data must be strictly local with no broader market data isn’t accurate. While the method uses comparable sales from the market area, it isn’t limited to local data; appraisers may incorporate nearby or broader market data when local data is sparse or when broader market trends are relevant to the subject.

So, while using comparable sales from the market area, making adjustments for differences between properties, and potentially incorporating market conditions data are all valid aspects, the idea that the approach uses only local data and excludes broader market data is not correct.