Appraisal Approaches to Value

Appraisal Approaches to Value

Appraisal Approaches to Value

There are three approaches appraisers and real estate professionals use to a value a property.

Sales Comparison Approach

This approach is the most commonly used approach in appraisal and sale of residential properties. The sales Comparison Approach uses sales prices as evidence of the value of similar properties. The price at which a particular property sells is the price determined by the interaction of supply and demand at the time of sale. To value a property under this method we use similar comparable sales and make pride adjustments based on condition, location and property attributes.

The Cost Approach

This approach a real estate valuation method that estimates the price a buyer should pay for a piece of property is equal the cost to build an equivalent building. It assumes that a buyer would not pay more for a property than it would cost to build a substitute. This method is effective to use when valuing a unique property without comparable sales. It allows a user to determine the value of a property by approximating the land value and adding the cost of the structures on the site. Adjustments to value are made for the following:

  • Physical deterioration: physical wear and tear
  • Functional obsolescence: decline in functional utility caused by changes in design and use preference.
  • External obsolescence: decrease in value resulting from declining neighborhood or market conditions.

Income Capitalization Approach

The income capitalization approach allows investors to estimate the value of a property based on the income the property generates. In this approach the user determines the value of the property to be the net present value of future income streams.

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Liz Penner is a top-selling licensed real estate salesperson with the Fraser

Valley Real Estate Board and has been a top-selling realtor specializing in the residential resale of condos, townhomes, and houses for over a decade. Liz assists residents of the Langley and Surrey areas to sell real estate while looking out for the client’s best interests. Liz also helps first-time homebuyers, families, and repeat purchasers with their property search process, ensuring that her clients get access to the very best homes on the market while receiving excellent service ensuring that they find the perfect place to call home.

Liz holds a BBA in leadership and has completed a variety of specific training through the Fraser Valley Real Estate Board in the areas of selling strata properties, foreclosures, estate sales, and new construction properties. Liz is also well versed in POAs, the Strata Property Act, and more.

If you are looking for a knowledgeable and professional real estate agent that is willing to do everything possible to ensure that you get top dollar for the sale of your home or to find the dream home you are looking for in the Surrey and Langley, BC areas then get in contact today.


  • I’ve helped sell over 400 properties throughout the Langley and Cloverdale area, and I’d love the opportunity to do the same for you.
  • I’ve experienced straightforward sales and sales that have gone off the rails, back on the rails, off the rails, and then back on again. That’s just the way the real estate train rolls, and it never rattles me.
  • I’ve got a solid toolkit to pull from when a problem arises. I take my job seriously each time, and I will make sure you get top dollar for your Fraser Valley, Langley, or Cloverdale home, smooth sailing, or otherwise.