Sales Comparison Approach
An appraisal method that estimates value by comparing the subject to recent sales of similar properties and adjusting the comparables toward the subject.
The sales comparison approach estimates value by analyzing recent sales of comparable properties and adjusting their prices for differences from the subject. Adjustments are always made to the comparable, never to the subject.
It is the primary method for residential property because similar homes usually sell often enough to provide reliable comparables.
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Value & Appraisal (9% of the exam)
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- Cost Approach
An appraisal method that adds land value to the depreciated cost to replace the improvements. It fits new or special-purpose buildings.
- Income Approach
An appraisal method that estimates value by dividing a property's net operating income by the capitalization rate.
- Market Value
The most probable price a property should bring in a competitive and open market under fair conditions with informed, willing parties.
This definition is Texas real estate exam-prep education, not legal, tax, or professional advice. Verify current rules against the official source before relying on them for a real transaction. Back to the full glossary.