When using the direct sales comparison approach, sales must first be stratified into what?

When employing the direct sales comparison approach in real property appraisal, it is essential to first stratify sales into homogeneous groups. This process involves categorizing properties that share similar characteristics, such as location, size, type, age, and condition. By doing so, appraisers can ensure that they are comparing like properties, which enhances the reliability and accuracy of the valuation.

Homogeneous groups allow the appraiser to identify trends and pricing patterns within a specific subset of the market, which are more reflective of the subject property's value. Without this critical step, the analysis could be skewed by including dissimilar properties that do not represent the market value effectively. Therefore, the foundation of the direct sales comparison approach hinges on establishing these homogeneous groupings to facilitate meaningful comparisons and informed appraisals.