Jump to Main Content

Three Approaches to Value Determination: Sales Comparison Approach, Cost Approach, and Income Approach

Three

EVM considers all three approaches to valuation in its appraisal and confers with clients to apply the proper appraisal methodology.

The Sales Comparison Approach investigates recent sales and offering prices for assets that are the same or similar to the subject property. The procedure includes gathering data, establishing the appropriate units of comparison and applying the results. EVM utilizes data gathering techniques that catalog and record all relevant data pertinent to the asset, including but not limited to; Make, Model, Serial Number, Size, Capacity, Year of Manufacture, Attachments and Condition.

The Cost Approach to valuation measures value by determining the current replacement cost (new) of the subject asset and deducting for the various elements of physical deterioration, functional obsolescence and economic obsolescence.

The Income Approach is based upon the present worth of the future benefits of ownership. The income approach is frequently used to value a group of assets that are utilized together to produce a marketable product for profit.