The appraisal process is an evaluation that generates an opinion of value. There are three “common approaches to value” which helps the real estate appraiser conclude this opinion or valuation. The Cost Approach is one of the approaches that appraisers use to find value; it involves finding what the improvements would be worth minus physical degradation, plus the land value.
Another of the processes is the Sales Comparison Approach – which concerns discovering a comparable analysis to other similar properties within a close vicinity which have recently sold. Usually, the Sales Comparison Approach is the most accurate indicator of value of a house. One of the least common approaches in appraising residential properties is the Income Approach, which is generally used to determine the worth of a property based on what an investor would pay based on the income produced by the property.