Paired sales analysis is primarily used in which type of appraisal?

Paired sales analysis is primarily used in which type of appraisal?

• A. Portfolio appraisal
• B. Single-property appraisal
• C. Mass appraisal
• D. Commercial appraisal

Answer: (B)

Paired sales analysis is primarily used in single-property appraisal because it involves comparing similar properties that have sold recently to ascertain the value influence of specific features or characteristics. This method allows appraisers to isolate the effect of particular elements, such as the number of bedrooms or the presence of a swimming pool, on the sale price of a property. By analyzing data from two similar properties—one with the feature and one without—appraisers can draw conclusions about how much value is added or diminished by that feature. This technique provides a refined approach to determining value for a single property by focusing on direct comparisons rather than broader market trends or values, which is essential in individual property assessments. In contrast, portfolio, mass, and commercial appraisals utilize different methodologies appropriate for their respective scopes. Portfolio appraisals typically assess multiple properties holistically, mass appraisal approaches analyze large quantities of properties simultaneously using statistical methods, and commercial appraisals consider income potential and financial metrics specific to income-producing properties. Each of these scenarios has different valuation challenges that are not as effectively addressed by paired sales analysis.

Paired sales analysis is primarily used in single-property appraisal because it involves comparing similar properties that have sold recently to ascertain the value influence of specific features or characteristics. This method allows appraisers to isolate the effect of particular elements, such as the number of bedrooms or the presence of a swimming pool, on the sale price of a property. By analyzing data from two similar properties—one with the feature and one without—appraisers can draw conclusions about how much value is added or diminished by that feature. This technique provides a refined approach to determining value for a single property by focusing on direct comparisons rather than broader market trends or values, which is essential in individual property assessments.

In contrast, portfolio, mass, and commercial appraisals utilize different methodologies appropriate for their respective scopes. Portfolio appraisals typically assess multiple properties holistically, mass appraisal approaches analyze large quantities of properties simultaneously using statistical methods, and commercial appraisals consider income potential and financial metrics specific to income-producing properties. Each of these scenarios has different valuation challenges that are not as effectively addressed by paired sales analysis.