Sales Comparison Approach - SCA

How do you know how much something is worth? Well, the main method is to...sell it. Whatever you get for it, that's what it's worth.

However, you can't always sell the thing in question in order to get a read on its value. Take your house. You need to know how much it's worth. The government uses the value to assign taxes. You can use the value to get home equity loans or to refinance. For these reasons, you want to know how much you could get for the home if you did sell it...but you don't actually want to sell it.

One way to come up with an estimate is to use the sales comparison approach. It's a relatively simple process. The appraiser looks at what prices similar houses went for, then uses that info to make a judgment on the value of your house. So she'll look at other houses in your area, with similar amenities and similar sizes. She can also use aggregate estimates, if there aren't enough directly similar houses to make a firm appraisal. Like, she can use data from other houses to estimate the value of having a pool, or what your recent kitchen upgrade would add. All this info gets put together to arrive at a total estimate for the value of the house.