Approaches to value

While there are three approaches to value - Cost, Income and Direct Comparison - in residential work it is largely the Direct Comparison Approach to value that is given the most weight.

Using this approach, the best recent comparable sales are identified and then adjusted accordingly to be more like the property in question. What we adjust for varies and may include, but is not limited to, size, acreage, condition, garage, date of sale, landscaping, etc.

The Direct Comparison Approach is based on the Principle of Substitution - the value of a given property should be no more than the cost of buying another substitute property. Therefore, prices that are paid or listed for similar properties should indicate the market value of a given property. Because of this principle, appraisers should be well-informed about the market such that when it is time to locate comparable properties, they know what is happening, what comparables are available, and where to find them. Nothing replaces market knowledge.