What type of sales must the Market Data Approach analyze?

The Market Data Approach, also known as the Sales Comparison Approach, analyzes bona fide sales of comparable properties because it relies on actual transactional data from properties that are similar in characteristics, such as size, location, and amenities, to the subject property being assessed. This approach focuses on sales that reflect what buyers are willing to pay in the open market, ensuring that the comparisons made are relevant and reliable.

By using bona fide sales, the assessor gains insight into the current market conditions and trends, which allows for accurate valuation. These sales are typically arms-length transactions, meaning they are conducted under normal conditions without pressure or unusual circumstances. This context helps ensure that the data reflects true market values, making it essential for the effectiveness of the Market Data Approach.

In contrast, major renovations may skew the comparison due to improved value that doesn’t reflect the original property condition. Sales under market value conditions could misrepresent the property's worth, as they do not represent typical market transactions. Similarly, focusing solely on distressed properties could limit the analysis and may not yield a reliable estimate of value for properties that are not under duress. Thus, examining bona fide sales of comparable properties provides the most accurate foundation for property valuation within the Market Data Approach.