Market Approach
Categories: Marketing
Ever wonder how appraisers decide how much a house is worth? They look at “comps”: similar properties, and their values, to start. This is the market approach of valuation: determining the value of an asset by looking at the sale price of similar assets.
If you’re looking to sell your car, seeing what cars are similar to yours in terms of the year, make, and model would be a market approach to figuring out how much to list your car for.
The market approach extends beyond consumer-level assets...think of the value of publicly traded companies via their stock price. Things like sales, revenue, size, and industry are all basics you could use to take a market approach to evaluating a company.
Related or Semi-related Video
Finance: What is an Auction Market?13 Views
Finance a la shmoop... what is an auction market.. next up on the block [Man speaking on stage]
we've got stock in the company comb Depot....
okay yeah so the New York
Stock Exchange is an auction market and you have no idea how much caffeine I had [Man holding a monster energy drink]
to have to get that right which means that the prices on the new york stock
exchange happen during a bidding process we're matching offers get you know [People frantically rushing to bid for stocks]
matched... buyers and sellers buy and sell at the
same time so in essence two transactions are happening at once the opposite of
this sort of market is the over the counter or OTC market where dealers are
the ones holding all the cards and they ultimately determine the price by [Dealer with the cards]
creating a spread from where they're willing to sell your shares and what
price they'll pay to buy your shares but in an OTC market well you don't get to [Dogs running side by side]
feel like you're watching the last leg of a greyhound race so you don't get all
my caffeinated auction talk there which is kind of cool we like that, right..right?