Market Approach

Ever wonder how appraisers decide how much a house is worth? They look at “comps”: similar properties, and their values, to start. This is the market approach of valuation: determining the value of an asset by looking at the sale price of similar assets.

If you’re looking to sell your car, seeing what cars are similar to yours in terms of the year, make, and model would be a market approach to figuring out how much to list your car for.

The market approach extends beyond consumer-level assets...think of the value of publicly traded companies via their stock price. Things like sales, revenue, size, and industry are all basics you could use to take a market approach to evaluating a company.