The valuation method that uses recent sales data to estimate a property's value is known as?

The valuation method that uses recent sales data to estimate a property's value is referred to as the sales comparison method. This approach involves analyzing the sale prices of similar properties in the same area to determine a realistic and justifiable value for the property being appraised. By comparing properties that have recently sold, an appraiser can account for current market conditions and trends, such as location, size, and features, providing a market-driven estimate of value.

The effectiveness of this method lies in its reliance on actual market transactions, making it particularly relevant in active real estate markets where comparable sales provide a clear picture of what buyers are willing to pay for similar properties. This empirical data serves as a solid foundation for the value derived, making it one of the most commonly used methods in residential appraisals.

In contrast, the cost method focuses on calculating the value of a property based on the cost to replace or reproduce it, minus depreciation, which may not reflect true market values. The income method is primarily used for investment properties, estimating value based on potential income generation rather than sales data. The gross rent multiplier method likewise assesses property value based on rental income but does not directly employ recent sales data for valuation.