By what other name is the sales comparison method, used to measure depreciation, known?

The sales comparison method, particularly in the context of measuring depreciation, is known as market extraction. This technique essentially involves comparing the sale prices of similar properties in the market to derive an estimate of value. When appraisers apply this method, they analyze actual sales data to extract what portion of the value of a property is associated with depreciation, based on the prices at which comparable properties have recently sold.

This method relies heavily on the principle of substitution, which suggests that a property’s value should not exceed the cost of obtaining an equally desirable substitute property. By investing in the sales data of comparable properties, appraisers can effectively isolate the impacts of depreciation by looking at how much buyers are willing to pay for similar properties in the current market conditions.

The other choices represent different methods or approaches in real estate appraisal but do not specifically pertain to the method used for measuring depreciation in this context. The cost approach focuses on the replacement costs of properties rather than comparable sales; income capitalization deals with estimating value based on income generation; and replacement cost pertains to the cost of producing a similar new structure, not directly measuring depreciation through market data.