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Appraisals
Methods
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2
of 2 Appraisals
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An appraisal is an opinion of value or the act or process of estimating
value. This opinion or estimate is derived by using three common
approaches, all derived from the market. They are:
1. Cost Approach to value is what it would cost to
replace or reproduce the improvements as of the date of the appraisal,
less the Physical Deterioration, the Functional Obsolescence and
the Economic Obsolescence. The remainder is added to the Land Value.
2. Comparison Approach to value makes use of other
"bench mark" properties of similar size, quality and location
that have been recently sold. A comparison is made to the subject
property.
3. Income Approach to value is of primary importance
in ascertaining the value of income producing properties and has
little weight in residential type properties. This approach provides
an objective estimate of what a prudent investor would pay based
upon the net income the property produces.
Then, after thorough analysis of all general and specific data
gathered from the market, a final estimate or opinion of value is
correlated.
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