Real Estate Appraisal Methods

Real Estate Appraisal Methods pic
Real Estate Appraisal Methods
Image: homebuying.about.com

Prior to graduating from the University of Florida with his BSBA in finance, Christopher Dabney did an internship as a credit analyst at Ameris Bank in Gainesville, Florida. While there, Christopher Dabney appraised and evaluated real estate parcels using the methods of both market and income approach.

The market and income approach methods represent two out of three commonly used real estate appraisal models. Below is a brief description of each method.

The market approach is sometimes called the sales comparison method. This approach determines the value of a property by looking at past sales (within a year) of similar properties. The value will be determined by analyzing the price of a comparable property sold under typical market conditions.

The income approach analyzes the ability of a rental property, such as an apartment building or condominium, to generate income. The value of the real estate is based on its ability to produce an economic benefit to the owner, taking factors such as vacancy and rent collection losses into account.