The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: Tradelite who wrote (14827)	11/5/2003 11:13:04 AM
From: Tradelite	Read Replies (1) of 306849

The Three Major Approaches To Estimating Value Excerpts from a textbook (The Language of Real Estate, by John W. Reilly)----- ________________________ "Note that an appraisal is an estimate, not a determination, of value. The appraiser does not determine value; people make value......The three major approaches to estimating the value of a property are: Market-Data Approach--a comparative analysis of current sales prices of similar properties.....also called the direct sales comparison approach.....most frequently used by real estate brokers in evaluating residences and is based on the principle of substitution. Cost Approach--based on cost of reproduction or replacement of the improvements, less depreciation, plus value of land, with land value being usually determined by the market-data approach. Used primarily to determine the value of service-type properties, such as churches or post offices. Income Approach--based on the capitalization of income and productivity, often called the income or economic approach to value. Used mostly with income-producing properties such as apartment buildings.

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