The sales comparison approach estimates property value by comparing the home with similar recently sold properties.
The sales comparison approach estimates property value by comparing the home with similar recently sold properties and adjusting for meaningful differences.
The sales comparison approach matters because it is one of the most familiar and influential ways residential properties are valued for mortgage lending.
It also matters because borrowers often hear about comps without understanding the broader valuation method behind them. This approach is the framework that turns comparable sales into a supported opinion of value.
Borrowers encounter this approach inside the appraisal process, even if the report does not become part of a conversation with the lender in those exact words.
The term becomes practical when a borrower wants to understand how the appraiser justified the number and why certain nearby sales mattered more than others.
A home is valued by reviewing several similar recently sold properties in the same market area, then adjusting for features such as size, condition, and lot characteristics. That is the sales comparison approach at work.
The sales comparison approach differs from Comparable Sales (Comps) because comps are the actual data points, while the sales comparison approach is the valuation method built around those data points.
It also differs from the Cost Approach and Income Approach, which rely on different valuation logic.