Phone:
(780)902-8570

Email address:
[email protected]

Valuation Methodologies

Direct Comparison Approach

When the Direct Comparison Approach is applicable, the appraiser develops an opinion of value by analyzing completed sales, listings or pending sales of properties similar to the subject property. Estimates of market rent, expenses, land value, cost, depreciation and other value parameters may be derived using a comparative technique.

Income-producing properties are typically purchased as investments, and the earning potential is an essential element affecting the value. Through the Income Approach, the appraiser analyzes a property’s capacity to generate income and converts the net income into a present value.

Income Approach

Cost Approach

The Cost Approach considers the land and building components separately and reaches a value conclusion by adding these together to form an opinion of value. Like the Direct Comparison Approach, the Cost Approach is based on comparing the cost to replace the subject (cost new) or the cost to reproduce the subject (substitute property). The total cost estimate is then adjusted by deducting the accrued depreciation in the subject property. Land value is also estimated and added to the building value.