Question

Explain the three approaches to value a property that the property appraiser uses?

Answer 1

Appraisers use three approaches to value in appraisal practice when determining the market value of a property:

a) sales comparison approach:

This approach to value based it's opinion of value on what similar properties in the vicinity have sold for recently.these properties are adjusted for time,acreage,size, amenities etc as compared to the property that is being appraised.

b) cost approach:

This approach seeks to determine how much a property would cost to replace after subtracting accrued depreciation. It is considered to be more reliable when used on newer construction. The methods and results and results of the cost approach are considered to be less reliable with older construction.

c) income approach:

When property generates income for it's owner,that income or potential for income helps to substantiate,calculate or identify the market value of the property.examoles are apartment buildings and duplexes.