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[Music] today we are talking about the market data approach to appraisal also known as the sales comparison approach it is really quite simple if you are trying to estimate the value of a property and two similar properties are 400 Grand then you would estimate the value of the property to be about 400 Grand it is one of those things where the definition is right there in the name kind of like jumbo shrimp M jumbo shrimp you are comparing sales data in the market Market hence the name Market data approach or sales comparison if you think about it you use this approach every day when you go shopping what is a good price for the shoes I want well what do the shoes that are similar cost typically appraisers will use comparable homes that were sold within 6 months of the appraisal if you are becoming a residential real estate agent you will become very familiar with this approach the market data approach is widely accepted as the most accurate method of comparison for residential real estate this approach is also perfect for vacant Lots because when there is a vacant lot there are not many variables so it is easier to get a direct comparison to the property in question whereas with a house the more add-ons there are the more variables there are to take into consideration when comparing the two properties this is the most difficult aspect of this approach when comparing two properties you need to deduct features of the comparable for example if one property has a pool and the other does not you need to account for the amount of the value of the pool that value is exactly in relation to the property can be very very tricky evaluating the property entails adjusting the value of the home by adding subtracting for size location amenities and condition in comparison to other recently sold properties in the market this approach utilizes the entire property as the unit of comparison the basis of the market data is the principle of substitution Market data is usually used to establish rent schedules how much do you want to charge somebody for rent just ask the tenants next door how much they're paying for rent it is that simple Market data becomes less reliable during times of Rapid economic change or instability in an inactive Market or in an analyze of unique properties there are limited options for comparing [Music] properties