What are the different Appraisal Methods?

An appraisal is the process of estimating value on a piece of real estate. This estimate is derived by using three common approaches. They are:

Cost Approach:
The appraiser estimates the current market value of the home by estimating the cost of reconstructing the home (to include any improvements) plus the value of the land minus the estimated depreciation of the home since the home was first built.

Comparison Approach:
The market value is determined by adjusted the sales prices of recently sold similar properties (comparables). The sales prices of the market comparables reflect the behavior of typical buyers in the marketplace.

Income Approach:
This is an analysis based on the relationship of value as related to the market rent that a property can be expected to earn.