What is the Market Approach?

The market or direct sales comparison approach to appraising a property involves a process of comparing market data such as property sale prices, asking prices, and offers of prospective buyers or tenants willing to purchase or lease.

Usually, a comparison grid is used to make adjustments to comparable sales for differences from the subject property for things like location, building size, lot size, condition, construction quality, number or baths, fireplaces, garage stalls, etc.

In the market approach, the appraiser attempts to measure and reflect the reactions that typical potential purchasers would have to the property being appraised.