Texas Property Tax Consultant Practice Exam

What best supports the sales comparison approach?

1. The age of improvements on the property

2. Similar properties in the same neighborhood or market area

3. An adjustment to the land value

4. The unique characteristics of the property

The correct answer is: Similar properties in the same neighborhood or market area

The sales comparison approach is a fundamental method used in real estate appraisal that determines a property's value based on the sale prices of comparable properties in the same market area. The principle behind this approach is rooted in the idea that a property’s value can be inferred from the selling prices of similar properties that have recently sold. Focusing on similar properties in the same neighborhood or market area provides a relevant and reliable foundation for comparison. These comparable properties, often referred to as "comps," should ideally share similar characteristics, such as size, age, style, and condition, to ensure that the comparison accurately reflects the market value. When appraisals take place, it’s important to evaluate how much buyers are willing to pay for properties that are alike, as this indicates what a buyer might reasonably pay for the subject property. Being situated in the same neighborhood is particularly crucial because local market conditions—including supply and demand, economic factors, and neighborhood desirability—can significantly influence property values. Using properties from different areas may not yield accurate reflections of market conditions affecting the subject property, thereby undermining the effectiveness of the sales comparison approach. The other options don't serve as primary supports for this appraisal method. The age of improvements or unique characteristics of the property may factor into adjustments