Which approach to property valuation considers the value of similar properties in the community?

The approach to property valuation that considers the value of similar properties in the community is known as the Direct Comparison Approach. This method involves analyzing recent sales of comparable properties, commonly referred to as "comps," to determine a property's market value.

In this approach, appraisers or valuators look at sales prices of similar properties that have been sold within a certain timeframe and geographical area, making adjustments for differences that could affect value. Factors such as location, size, condition, and amenities are all considered to arrive at a fair market value. This makes it an essential method in real estate, especially for residential properties, as it reflects current market conditions and buyer demand.

The other options, such as the Cost Approach and Square Footage Approach, focus on different valuation methodologies that don't emphasize recent market transactions of similar properties in the manner that the Direct Comparison Approach does.