Which of the following is the most appropriate valuation approach for a single-family residential property in a well-established neighborhood with many recent sales?
Correct Answer
B) Direct comparison approach
The direct comparison approach is most suitable for residential properties when there are sufficient comparable sales available. This method relies on analyzing similar properties that have sold recently in the same area to determine market value.
Why This Is the Correct Answer
The direct comparison approach is most appropriate because single-family residential properties in well-established neighborhoods typically have abundant comparable sales data. This method directly reflects market behavior and buyer preferences, providing the most reliable value indication. The approach aligns with Canadian appraisal standards and the principle of substitution. When sufficient recent sales of similar properties exist in the same market area, this approach offers the most credible and defensible value conclusion for residential properties.
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