Which statement about sales data in the direct comparison approach is true?

Which statement about sales data in the direct comparison approach is true?

• A. They are forecasts of future market conditions
• B. They are historical, reflecting past market conditions
• C. They reflect future trends
• D. They are not used in the method

Answer: (B)

In the direct comparison approach, the sales data used are historical, reflecting past market conditions. This method relies on recently completed sales of comparable properties and uses the actual prices paid, not forecasts, to gauge value. The idea is to observe what buyers actually paid under the market conditions at the time of each sale, then adjust for differences between the subject and the comparables and for changes in market conditions since those sales. So the data themselves come from past transactions, even though adjustments may bring them into current-day relevance. This is why the statement that sales data are historical and reflect past market conditions is the best description.

In the direct comparison approach, the sales data used are historical, reflecting past market conditions. This method relies on recently completed sales of comparable properties and uses the actual prices paid, not forecasts, to gauge value. The idea is to observe what buyers actually paid under the market conditions at the time of each sale, then adjust for differences between the subject and the comparables and for changes in market conditions since those sales. So the data themselves come from past transactions, even though adjustments may bring them into current-day relevance. This is why the statement that sales data are historical and reflect past market conditions is the best description.