What role do comparable sales play in the sales comparison approach?

In the sales comparison approach, comparable sales serve as a vital tool for establishing the value of a property. This method relies on the premise that the value of a property can be determined by looking at the sale prices of similar properties that have recently sold in the same market. By comparing these properties, appraisers can derive a value for the subject property based on what buyers have been willing to pay for comparable homes. This approach focuses on current market activity and reflects real-time demand and supply trends, making it an effective and reliable method for determining value.

The other options relate to different aspects of property appraisal. For instance, cost of construction pertains to estimating the cost to construct a property rather than its market value. Historical price trends may inform general market conditions but do not directly determine the current market value of a particular property. Depreciation calculations deal with the reduction of property value over time due to factors like wear and tear, which is not the function of comparable sales in the sales comparison approach.