Which property appraisal approach uses historical data to determine value?

The Sales Comparison Approach is the correct choice because it involves analyzing the sale prices of similar properties (comparables) that have been sold in the vicinity to estimate the value of the property in question. This approach heavily relies on historical data, as it examines actual transactions to determine current market value based on what buyers have previously paid for comparable properties. It is particularly effective in active real estate markets where there is sufficient data on similar recent sales.

This method also considers adjustments for differences between the subject property and the comparables, which helps ensure the valuation reflects the current market conditions accurately. The Sales Comparison Approach is widely used for residential properties and is favored for its direct relationship with market conditions and buyer behavior.

Other approaches, such as the Cost Approach or Income Approach, use different methodologies to assess value that do not primarily depend on historical sales data. The Cost Approach focuses on calculating the cost to replace or reproduce the property minus depreciation, while the Income Approach looks at the potential income generation of a property to ascertain its value. Market Analysis Approach isn't a formal appraisal method; it includes broader market trends and indicators without narrowing down to specific property sales data.