Which statement describes a disadvantage of the direct comparison approach?

Which statement describes a disadvantage of the direct comparison approach?

• A. It always requires no data
• B. It yields the highest precision
• C. If inadequate data is available, it may be impossible to apply
• D. It never requires adjustments

Answer: (C)

Direct comparison uses prices from recently sold, similar properties and adjusts for differences to reflect the subject property. A key limitation is data availability: if there aren’t enough truly comparable sales, or the market is not liquid enough to provide reliable data, the method can’t yield a trustworthy value and may be impossible to apply. This is why the statement describing a disadvantage focuses on the need for adequate data. The other ideas aren’t accurate in practice: this method does require data, it doesn’t always achieve the highest precision (precision depends on the quality and number of comparables and market conditions), and adjustments are a normal part of aligning differences between properties.

Direct comparison uses prices from recently sold, similar properties and adjusts for differences to reflect the subject property. A key limitation is data availability: if there aren’t enough truly comparable sales, or the market is not liquid enough to provide reliable data, the method can’t yield a trustworthy value and may be impossible to apply. This is why the statement describing a disadvantage focuses on the need for adequate data. The other ideas aren’t accurate in practice: this method does require data, it doesn’t always achieve the highest precision (precision depends on the quality and number of comparables and market conditions), and adjustments are a normal part of aligning differences between properties.