Which valuation method used by real estate professionals is most similar to the sales comparison approach used by appraisers?

Which valuation method used by real estate professionals is most similar to the sales comparison approach used by appraisers?

• A. Automated Valuation Model
• B. Broker Price Opinion
• C. Comparative Market Analysis
• D. Cost Approach

Answer: (C)

Valuing a home by comparing it to recently sold, similar properties and adjusting for differences is the key idea here. A Comparative Market Analysis is the method real estate professionals use that aligns most closely with the sales comparison approach used by appraisers. A CMA looks at comps—properties like the subject that have sold recently—and uses those sale prices, along with adjustments for features, conditions, and market conditions, to estimate a competitive listing or selling price. This mirrors the appraiser’s method of deriving value from what similar homes actually sold for. The other methods operate differently. An Automated Valuation Model relies on algorithms and broad data to generate an estimate, not the nuanced, comp-specific adjustments a CMA provides. A Broker Price Opinion is a quick lender-focused estimate and tends to be less thorough than a CMA. The Cost Approach builds value from the cost to replace the improvements minus depreciation, which is not how the sales comparison method determines value.

Valuing a home by comparing it to recently sold, similar properties and adjusting for differences is the key idea here. A Comparative Market Analysis is the method real estate professionals use that aligns most closely with the sales comparison approach used by appraisers. A CMA looks at comps—properties like the subject that have sold recently—and uses those sale prices, along with adjustments for features, conditions, and market conditions, to estimate a competitive listing or selling price. This mirrors the appraiser’s method of deriving value from what similar homes actually sold for.

The other methods operate differently. An Automated Valuation Model relies on algorithms and broad data to generate an estimate, not the nuanced, comp-specific adjustments a CMA provides. A Broker Price Opinion is a quick lender-focused estimate and tends to be less thorough than a CMA. The Cost Approach builds value from the cost to replace the improvements minus depreciation, which is not how the sales comparison method determines value.