Which approach involves comparing the subject property to similar properties that have recently sold?

The approach that involves comparing the subject property to similar properties that have recently sold is known as the Sales Comparison Approach. This method is widely used in real estate appraisals to determine the value of a property by analyzing the sale prices of comparable properties, often termed "comps."

In this approach, appraisers look at various characteristics of the recently sold properties, such as location, size, condition, and features, to estimate a fair market value for the subject property. This comparative analysis helps ensure that the value reflects current market conditions and buyer trends, making it a reliable method of valuation in a residential context.

While the Direct Comparison Approach might seem closely related, it is often considered a subset of the Sales Comparison Approach. Therefore, the broader term "Sales Comparison Approach" is preferred for the sake of clarity in appraisals and real estate assessments. The Cost Approach and Income Approach represent different methodologies that focus on the cost of development or income generation capabilities, rather than direct comparison with sold properties.