Approaches To Value
SALES COMPARISION APPROACH
The Sales comparison approach is the most useful and accurate of the three appraisal approaches in determining market value for residential properties when there are sufficient sales. This is because the sales comparison approach relies on information based on the historical market activity. *
COST APPROACH
The cost approach is best suited for unique properties or ones not sold often enough for adequate sales comparison data. The cost approach is also excellent for new properties and for appraising insurance value.*
INCOME APPROACH
The income approach is best suited for properties of an income-producing nature and for which income and expense figures are readily available. Furthermore, the income approach offers a method of analyzing the value of a future income stream.*
* Definition of value; HONDROS LEARNING, Basic Appraisal Procedures, 2nd Edition.