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| I've heard that appraisers have three approaches to value. What does that mean? |
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| Written by Brian Chester |
| Friday, 20 November 2009 09:10 |
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I have heard that appraisers have three approaches to value. What does that mean?
Appraisers have three ways of valuing property. They can tell you the replacement cost under the cost approach. They can tell you what your property should sell for under the sales comparison approach. Both of these are familiar to anyone who has purchased a house. The last approach is the income approach. Under this approach, the appraiser figures out how much net income the owner ought to be able to make from the building, usually over a ten year period, as well as what the building would sell for after the ten years are up. Growth rates, inflation and present value are calculated with prevailing market norms to come up with the total income the property will generate over the ten year period, plus the amount gained at resale, all reduced to present value, which is the value of the property under this approach. The three values are then reconciled and a value estimate is given. Add this page to your favorite Social Bookmarking websites |
| Last Updated on Thursday, 04 February 2010 00:46 |
