How does the appraiser determine market value?
Three common approaches, all derived from the market are used. The Cost Approach is what it would cost to replace or reproduce the improvements as of the date of the appraisal, adjusting for deterioration and obsolescence. The Comparison Approach compares the subject properties to others of similar size, quality, and location that have sold recently. The Income Approach, used primarily for commercial properties, looks at what a prudent investor would pay based on the net income produced by the property.
