What is the purpose of using comparables in real estate appraisals?

The purpose of using comparables in real estate appraisals centers on determining an opinion of value based on similar properties. Comparables, or "comps," are selected properties that are similar in key characteristics such as size, location, age, and condition to the property being appraised. By analyzing the sale prices of these similar properties, the appraiser can establish a realistic value estimate for the subject property.

This method is rooted in the principles of supply, demand, and market behavior. Appraisers rely on observed transactions and current market conditions to draw conclusions about the value of properties. This approach not only provides an objective basis for valuation but also reflects how similar properties are valued by buyers in the marketplace.

Using comparables allows appraisers to identify prevailing market values and trends, ensuring that the opinion of value aligns with what purchasers are willing to pay for properties with comparable attributes. This practice is essential in providing a credible and supportable conclusion that meets professional appraisal standards.