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Definition: Sales Comparison Approach
It is one of the methods used for valuation, especially in real estate industry. In this method, we compare the properties of asset (land) to be sold with the properties of comparable assets sold in the recent past. This approach considers that the value of something is equal to the sum of the values of the individual components making up the entity.
Some of the properties for which SCA can be used are:
• residential and condominium properties
• multi-residential properties
• commercial and warehouse properties
This method is based on the assumption that a purchaser would not pay more to purchase a property of certain utility than for comparable property of the same utility. This method is best suited for residential and investment properties that sell frequently on the open market.