Michigan Salesperson PSI Practice Exam

For a typical single-family residence, the sales comparison approach is the go-to method because it bases value on actual market transactions of similar homes. The appraiser looks at recent, nearby sales of houses that are close in size, condition, age, and features, then makes adjustments for any differences to align them with the subject property. This approach captures current buyer preferences and market conditions, which is especially reliable for a 20-year-old home with plenty of comparable sales.

The cost approach, by contrast, estimates how much it would cost to replace the home today, minus depreciation, and is mainly used when good comparables are scarce or for unique properties or new construction. The income approach applies to properties that generate income, like rental buildings, and isn’t typically used for a standard residence. Reconciliation isn’t a primary estimation method; it’s the step of weighing values from multiple approaches to form a final opinion of value if more than one method is used.