The Appraisal Process
The appraisal process is a comprehensive analysis of a property's value, taking into account various factors such as location, type of property, and market conditions. Gooch Appraisal Service conducts thorough inspections and analyses to ensure accurate and fair valuations. Prices for our appraisal services vary based on property type, proximity, and the time required for the valuation. Contact us today to receive a free quote and let us assist you in understanding your property's worth. A general overview of the appraisal process and three approaches to value is explained below.
Appraisal Overview
There are three (3) typical approaches to value developed in an appraisal report to value your property. Based upon multiple factors and potential data available, one or two approaches may not be applicable to every property.
Sales Comparison Approach
The Sales Comparison Approach is based upon the principle of substitution. Essentially, this principle states that a rational buyer would not pay more for a property than the cost to purchase a comparable property with similar utility. In this approach, we locate recent sales of properties that are comparable in terms of building age and size, site size, location / market, condition, and utility.
Cost Approach
The Cost Approach is also based upon the principle of substitution, which in this case states that a rational buyer would not pay more for a property than the cost to construct an equally desirable substitute with similar utility. In this approach, we value the land as though vacant and determine the depreciated replacement cost new of existing improvements.
Income Approach
The Income Approach is based upon the principle of anticipation, which states that a value of a property is based upon an investor's anticipation of some future benefit (income). This approach is most applicable to income-producing properties. In this approach, we typically use direct capitalization to value the property by determining a property's potential net operating income (NOI) and dividing it by an appropriate capitalization rates.