Definitions for "Market Approach"
One of the 3 major approaches to value estimation. It is based on the idea that value can be derived by comparing the subject property to recently sold similar properties with allowances for differences. Comparables inferior to the subject property (i.e. those not as good as or offering fewer or lower quality amenities and features than the subject) likely suggest the bottom value range for the subject property and comparables superior, the upper. If adjustments are attempted, amenities or features inferior or not as good as the same subject amenities or features are adjusted upward and those superior adjusted downward.
Determining a value indication of a business by using one or more methods that compare the subject to similar businesses, ownership interests, securities or intangible assets that have been sold. (Also called a “Market-Based Approach”.)
One of the steps in the valuation process. The property being appraised is compared with similar properties that have recently been sold or offered for sale. Adjustments are made to compensate for differences between the comparables and the subject property to obtain the market value of the subject.
This is an accepted means through which buyers and sellers can communicate and trade at mutually agreed terms.