What is the preferred approach for estimating the value of a single family residence?

The preferred approach for estimating the value of a single-family residence is Comparable Market Analysis (CMA). This method involves analyzing the sale prices of similar properties in the same area to determine a realistic market value for the property in question. By using data from comparable homes—often referred to as "comps"—that have recently sold, brokers and appraisers can gain a clear understanding of the market dynamics and price trends.

This approach is particularly effective for residential properties because it reflects what buyers are actually willing to pay based on the current market conditions. It takes into account the location, size, condition, and amenities of comparable homes. This real-world data provides a more accurate and relevant assessment of value for a single-family residence compared to more generic methods.

Other methods, such as the cost approach, which estimates the value based on the cost to replace the home minus depreciation, and the income approach, which is more applicable for rental or investment properties, are not typically used for single-family homes that are owner-occupied. The utility approach, which considers how useful a property is to its owner, also does not offer the concrete market-based insights necessary for accurately estimating a single-family residence's value.