What are Appraisal Methods?

There are 3 common approaches, or Appraisal Methods, used by Appraisers to establish property value. After thorough exercise of all 3, a final value estimate is correlated. When evaluating single-family, owner-occupied properties, the Sales Comparison Approach is heavily weighted by an Appraiser.

Cost Approach – A formula is used to obtain the property value: Land value (vacant) added to the cost to reconstruct the appraised building as new on the date of value, less accrued depreciation the building suffers in comparison with a new building.
Sales Comparison Approach – The Appraiser identifies 3 to 4 comparable comps, recently sold properties in the neighborhood, ideally, sold in the previous 6 months and within ½ mile of the subject property. A comparison is done between the recently sold properties and the subject property including square footage, number of bedrooms and bathrooms, property age, lot size, view, and property condition.
Income Approach – The potential net income of the property is capitalized to arrive at a property value. Capitalization is the process of converting a future income stream into a present value. This approach is suited to income-providing properties and is used in conjunction with other valuation methods.

Pre-qualify for a loan in a few simple steps

Get Started

Fill out your Secure Application

Apply Now

See what our clients are saying:

Testimonials

This site uses cookies to process your loan application and other features. You may elect not to accept cookies which will keep you from submitting a loan application. By your clicked consent/acceptance you acknowledge and allow the use of cookies. By clicking I Accept you acknowledge you have read and understand Oak Tree Home Loans and Finance Inc.'s Privacy Policy.

What are Appraisal Methods?

About Us

Contact Us

Disclaimers

Resources