Definition of Market approach:
Method of arriving at the appraisal value of an asset, instrument, or interest on the basis of the prices at which similar items are available or were sold within the last three to six months, and making appropriate adjustments for differences in quality, quantity, or size. Also called market based approach or market comparison approach. See also cost apporach and income approach.
Regardless of the type of asset being valued, the market approach studies recent sales of similar assets, making adjustments for the differences between them. For example, when appraising real estate, adjustments might be made for factors such as the square footage of the unit, the age and location of the building, and its amenities.
The market approach is a method of determining the value of an asset based on the selling price of similar assets. It is one of three popular valuation methods, along with the cost approach and discounted cash-flow analysis (DCF).
How to use Market approach in a sentence?
- The market approach excels in situations where abundant data is available on comparable transactions. When that data is not available, alternative approaches may be required.
- It is one of three popular approaches, along with the cost approach and discounted cash-flow analysis (DCF).
- The market approach is a method for determining the value of an asset.
Meaning of Market approach & Market approach Definition