Appraisal Approach refers to one of the three primary methods used to estimate the value of a property. The three key appraisal methods include the Cost Approach, Income Approach, and Sales Comparison Approach. Each methodology evaluates different aspects of the property to determine its fair market value.
Appraisal by Summation, also known as the Cost Approach, is a real estate valuation method that determines the value of a property by adding the land value to the depreciated value of any improvements (such as buildings) made on it.
In real estate appraisal, the Breakdown Method is a comprehensive approach used to divide accrued depreciation into distinct categories: physical depreciation, functional obsolescence, and economic obsolescence. This method contrasts with the age-life method of depreciation.
The Cost Approach is a real estate appraisal method that estimates the value of a property by calculating the cost of reconstructing the structure on the same piece of land. This approach considers the depreciated reproduction or replacement cost of improvements, plus the market value of the site.
The final value estimate is the appraiser’s concluded value of a real estate property, determined after reconciling values from different appraisal approaches such as cost, sales comparison, and income.
A Quantity Survey is a meticulous method used by appraisers to estimate the reproduction cost (new) of an improvement. It involves a detailed cost estimate of all materials, labor, and overhead required to replicate a structure.
Reconciliation in appraisal involves analyzing values from different valuation approaches to arrive at a final estimate of a property's market value.
Reproduction cost is the expense involved in duplicating a property exactly, denoting the total amount required to construct a replica of the structure using the same materials, design, and workmanship as the original.
A special-purpose property is a building with unique features and limited uses, making its marketability niche-driven. Examples include churches, theaters, schools, or public utilities.
A method used by appraisers to estimate the reproduction cost (new) of a structure by evaluating the cost of its individual components. The unit-in-place method involves estimating the cost to produce and install components like the foundation, exterior walls, and plumbing.
The valuation process is a systematic method used by appraisers to derive an estimate of the value of a property, essential for making informed real estate transactions.
