In the direct sales comparison approach, adjustments are made to which property?

In the direct sales comparison approach, adjustments are made to the comparable property. This method relies on the principle that similar properties should sell for similar prices, so the appraiser identifies recently sold properties similar to the subject property and makes adjustments to account for differences in characteristics.

The reason for adjusting comparable properties is to bring them in line with the features and qualities of the subject property. For example, if a comparable property sold for a certain price but has a larger square footage or a more updated kitchen than the subject property, an adjustment needs to be made to reflect that difference; the sale price may be reduced to account for the superior features of the comparable.

This process allows the appraiser to determine a more accurate approximation of the market value of the subject property by analyzing how the features and circumstances of comparable sales influence their sale prices. The adjustments help ensure that the value conclusion is based on a fair comparison and informed estimation.