What are the "three approaches to value" used in property appraisal?

The three approaches to value used in property appraisal are the Sales Comparison, Cost, and Income Approaches. Each of these methods provides a different perspective on determining a property's value based on varying factors.

The Sales Comparison Approach involves examining the sale prices of similar properties in the area to estimate the value of the subject property. This method is particularly effective in active markets where comparable sales are readily available, making it a cornerstone in residential appraisals.

The Cost Approach calculates value based on the cost to replace or reproduce the improvements, minus physical depreciation, plus the value of the land. This approach is often utilized for new constructions and unique properties where comparable sales data may be limited.

The Income Approach is mainly used for investment properties and calculates value based on the income the property generates. This method involves determining the net operating income and applying a capitalization rate to derive the property's value.

In contrast, the other options presented focus on aspects or elements relevant to real estate but do not represent the recognized approaches to appraising property value. Market Analysis, Physical Inspection, and Financial Review are components that appraisers may engage in but do not constitute the formal approaches to value. Similarly, Land Use, Zoning, and Developmental Potential relate to property features and regulatory considerations, rather