Ace the Michigan Real Estate Salesperson Exam 2025 – Unlock Your Future in Real Estate!

The sales comparison approach is often the most appropriate method for estimating the value of a 20-year-old residence. This approach involves comparing the subject property to similar properties that have recently sold in the same area. It is particularly effective for residential properties because it considers the actual market behavior and reflects the value based on what buyers are willing to pay for comparable homes.

In the case of a well-established residential property, such as a 20-year-old residence, the sales comparison approach helps to account for factors such as location, size, condition, and amenities by using data from comparable sales. This provides a market-driven estimate of value, aligning closely with how real estate transactions occur in practice.

The cost approach, while useful, is often less reliable for older homes since it calculates the value based on the cost of replacing the property minus depreciation, rather than current market trends. The income approach is typically applied to investment properties where potential rental income is a critical factor and not appropriate for owner-occupied residences. Market analysis, while beneficial for understanding trends, does not provide a direct valuation method like the sales comparison approach does. Therefore, for a 20-year-old residence, the sales comparison approach stands out as the most suitable method for estimating value.