Texas Real Estate Appraisal Practice Exam

The sales comparison approach is particularly significant during the reconciliation phase for a single-family residence because it directly analyzes recent sales of comparable properties in the same market. This method provides tangible market data that reflects the current value of similar homes, making it highly relevant for appraisals in residential real estate.

In the reconciliation phase, an appraiser synthesizes information and determines the most accurate value estimate by giving weight to the various approaches considered. Since single-family homes are often purchased based on their market value compared to similar properties, the sales comparison method serves as a credible and reliable basis for determining worth. It relies on actual sales, thus capturing market trends and buyer preferences, which are critical in a residential context.

While the cost approach may be useful for determining value based on the cost of replacement or reproduction, it may not accurately reflect what buyers are willing to pay in a competitive market. The income approach is typically more relevant for investment properties where rental income is a primary concern, rather than single-family residences that are usually owner-occupied. The substitution principle underlies the sales comparison approach but does not standalone as an appraisal method; instead, it serves as a supporting concept for valuation. Therefore, the sales comparison approach stands out as the most significant method in the reconciliation