Which appraisal approach is primarily based on the comparison of similar properties?

The sales comparison approach is correct because it relies on analyzing the sale prices of similar properties—often referred to as "comparables" or "comps"—to determine the value of the subject property. This method is primarily used in residential appraisals because it reflects the current market conditions and buyer preferences, leading to an accurate depiction of value based on actual transactions.

The sales comparison approach involves adjustments for differences in features, size, location, and date of sale, ensuring that the comparison is as direct as possible. This nuanced consideration of similar properties sets it apart as the most relevant approach when there is an active market for the type of property being appraised.

Other approaches, such as the cost approach, involve estimating the replacement cost of the property and subtracting depreciation, making them less directly connected to current market activities. The income approach focuses on the potential rental income of a property, which is useful for investment properties but not as applicable for residential homes. The market data approach is similar to the sales comparison approach but is often broader and less specific, making it less precise in determining the value of a property based on recent sales data. Overall, the sales comparison approach is the most appropriate method for establishing value through the lens of similar properties.