What method focuses on the actual sales of properties for valuation?

• A. Appraisal-based index
• B. Sales comparison approach
• C. Cost approach
• D. Transaction-based real estate indices

Answer: (D)

The method that focuses on the actual sales of properties for valuation is the transaction-based real estate indices. This approach utilizes actual transaction data to assess the value of properties, reflecting current market conditions and price trends. By relying on real sales data, this method provides a more accurate and relevant valuation compared to models that may use estimates or appraisals.

Transaction-based indices capture the value changes of properties sold in the market, which helps investors and analysts gain insights into property appreciation or depreciation over time. This method can be particularly useful in assessing investment performance and making informed decisions about buying or selling properties.

In contrast, the appraisal-based index depends on appraisers' evaluations rather than direct sales transactions, which may not fully capture market dynamics. The sales comparison approach, while closely related, primarily involves comparing a subject property to similar properties that have sold recently, rather than looking at aggregated sales data. The cost approach estimates the value based on the cost to replace or reproduce the property, including adjustments for depreciation, which does not directly reflect market sales.