Which assessment method focuses on what similar properties have sold for?

The market approach is centered around analyzing the sale prices of similar properties to gauge a property's value. This method, often referred to as the comparable sales approach, relies on the principle of substitution, which suggests that buyers are not willing to pay more for a property than they would for a similar one in the market.

In practice, assessors will look at recent sales data of properties that share similar characteristics—such as location, size, and condition—to establish a fair market value for the property in question. By comparing these properties, assessors can draw insights about the current market conditions and trends, making this approach particularly effective in active real estate markets.

This method is distinct from the income approach, which evaluates value based on potential income generation, and the cost approach, which assesses value based on the cost to replace or reproduce the property, minus depreciation. The investment approach, while somewhat related to the income method, typically involves a more complex analysis of risk and return, and is not primarily focused on recent sales data of similar properties.