In the sales comparison approach, you adjust prices of the comparables to reflect differences from the subject property, and then you analyze those adjustments to see if the data set and the adjustments themselves make sense. Once that analysis shows you aren’t getting a reliable picture from the current set of comparables, the next step is to select new comparables that will better reflect market conditions and the subject’s characteristics. This helps ensure the adjustments you apply are meaningful and that the resulting value indication is credible. Other steps belong in different parts of the process: reanalyzing adjustments would repeat the prior step, computing the replacement cost ties to the cost approach, and determining land value is a separate component often considered before addressing the improvements.

Appraisers estimate value using three core methods: the sales comparison (market data) approach, the cost approach, and the income approach. The sales comparison approach looks at recently sold, similar properties and adjusts for differences to infer value based on actual market transactions. The cost approach estimates value by determining how much it would cost to replace or reproduce the improvements today, then subtracting depreciation and adding the land value. The income approach converts expected income from the property into value, usually using net operating income and a capitalization rate (or discount rate), which is especially relevant for investment properties. These three methods together cover how the market behaves (sales data), what it costs to reproduce the property (cost data), and the property's income-producing potential (income data). The correct option lists these three approaches precisely: sales comparison (market data), cost, and income approaches. Other terms in the distractors refer to components or concepts within these approaches rather than distinct appraisal methods.

The highest and best use should be determined before data collection begins, so the appraisal is guided by a specific, legally permissible, physically possible, financially feasible, and maximally productive use from the outset. Establishing the HBU early frames what data are needed and which market factors to analyze, ensuring that every step of the appraisal supports that chosen use. If you wait until after data collection or after final value, you risk collecting irrelevant information or misapplying analyses to a use that wasn’t chosen, wasting time and potentially biasing the conclusions.

Nonconforming use happens when a property is being used in a way that was legal before a zoning change, but that use doesn’t meet the current zoning rules. Because the use existed legally prior to the change, many places allow it to continue as a kind of “grandfathered” status, even though it no longer complies with new zoning. The catch is that this use can continue as it is but typically can’t be expanded or rebuilt to increase the nonconformity, and some rules may require it to stop if it’s abandoned or damaged beyond a limit. This is why the correct description is a use that was legal when established but may not comply with current zoning, though may continue.