What is the minimum number of comparables an appraiser should use in the direct sales comparison approach?

In the direct sales comparison approach, using a minimum of three comparables is essential for providing a credible and reliable valuation. Three comparables allow the appraiser to identify trends and variations in the market, thereby enhancing the accuracy of the valuation.

Having three examples helps to mitigate the influence of anomalies or outliers that can skew the analysis if only one or two comparables are used. This is crucial, especially in fluctuating markets where values can vary significantly between properties. By considering three properties, the appraiser can create a more balanced view of the market data, which aids in forming a well-reasoned appraisal opinion.

Furthermore, employing more than one comparable makes it possible to analyze the features and pricing variances effectively, allowing for adjustments that reflect the differences between the subject property and the comparables. While using one or two comparables may yield some insight, it lacks the robustness and reliability that come with a minimum of three, which is why this is regarded as the standard practice in the direct comparison approach.