What type of information does the sales comparison approach primarily rely on?

The sales comparison approach primarily relies on recent sales data of comparable properties because it is a method that determines the value of a property by comparing it to similar properties that have recently sold in the same area. This approach is grounded in the principle of substitution, which suggests that a buyer will not pay more for a property than the cost of purchasing a similar one in the same market. Recent sales data provide current market conditions and are crucial for ensuring that the estimates reflect what buyers are actually willing to pay.

Using tax assessment values, historical market trends, or personal opinions does not provide the immediate, specific evidence needed for accurate valuation in the sales comparison approach. Tax assessed values can be outdated and do not reflect current market conditions. Historical trends may inform broader market analysis but lack the specificity that recent sales data offer. Lastly, personal opinions can introduce bias and subjectivity that undermine the objectivity required in property valuation. Thus, relying on recent sales data of comparable properties ensures that the appraisal is based on real market activity and is more likely to reflect a property's true market value.