Which method of estimating site value involves a comparison to recent sales of comparable properties?

The method that involves comparing recent sales of comparable properties to estimate site value is known as the Sales Comparison Method. This approach is grounded in the principle of substitution, which posits that an informed buyer would not pay more for a property than what they would pay for a similar one in the market.

In practicing this method, appraisers analyze the sales data of properties that possess similar characteristics, such as size, location, and zoning. By examining these comparable properties—often referred to as “comps”—appraisers can make adjustments to the sale prices based on factors such as differences in size, features, and the time of sale. This comparative analysis allows the appraiser to determine a market-based value for the site being evaluated.

The other methods listed do not directly involve comparing recent sales of comparable properties. The Ground Rent Capitalization Method focuses on income generated from land leases, the Land Residual Method is used for estimating land value based on the income generated by a property after accounting for the improvements, and the Abstraction Method estimates value based on the costs associated with the land and its development. All of these methods rely on different principles and frameworks that do not prioritize recent sales comparisons in the same way as the Sales Comparison Method does.