What is the primary method of valuing residential property?

The sales comparison approach is the primary method of valuing residential property because it focuses on evaluating properties that are comparable to the subject property in terms of location, size, features, and condition. This method relies on data gathered from recent sales of similar properties to determine a fair market value. By comparing the sale prices of these comparable properties, appraisers can adjust for differences and arrive at an estimated value for the property being assessed.

This approach is particularly effective in residential real estate due to the availability of ample market data from similar homes that have sold in the same area, which allows for reliable comparisons. It reflects current market conditions and the preferences of buyers and sellers, making it a relevant and practical method for residential appraisals.

While the income approach is more suited for investment properties, where cash flow is taken into account, and the cost approach is often used for new constructions or unique properties, the sales comparison approach remains the most widely used method for valuing residential real estate. Market analysis, while valuable for understanding trends and conditions, is more of a preliminary step rather than a standardized method of valuation on its own.