What are different types of approach to evaluation?
Three different types of approaches or methods to carry out evaluation are cost approaches, market comparison and income. These approaches are economic models that represent different ways of estimating the value of assets. The evaluators use their expertise to determine the approach, which is most important for the type of property concerned. The valuation of assets is a technique rather than a factual exercise and the approach of evaluation provides a context by which the appraiser makes his / her expert opinion. Until the actual purchase is made in order to determine the price that the actual buyer pays in the open market, any discussion of the property value is speculative. Assessment of the evaluation is trying to use valuation models to estimate what this property is worth or would sell in certain circumstances. The value of the property is not always equal to the price that the buyer would pay for the current or future market conditions, so any evaluation is a professional judgmental call made according to certain restrictions.
one of KMake -up restraints are valuation access. The evaluator must decide which economic construct can provide the best estimate of value. The decision to use one approach to evaluation rather than others often depends on the type of properties concerned and the context in which the evaluation is carried out. Very rarely, only one approach to evaluation is the only way to appreciate the feature.
The cost approach determines the value by determining the actual replacement costs of the property. The purchase of land takes into account costs and replicates improvements using currently available work and materials. This approach to evaluation is most often used on unique assets and insurance companies in the structuring of the payment of insurance income. In this case, the question of valuation is not what prophety would sell in the open market, but what the owner would need to rebuild the exact structure.
market comparison or comparable toP for sale is used to appreciate apartments with family. It creates a value by comparing real estate with similar properties that have recently been sold on the local market. Each piece of property is functionally and situations unique and no comparison of similar properties can fully determine the probable selling price. The evaluators use their best judgment to select comparable properties and to estimate market value on the basis of actual sales.
Access to income determines the value of the properties based on the extrapolation of the value of the current and the future income current of the property. This approach to evaluation is most often used to assess commercial assets, such as more uniform apartment buildings. For example, the evaluators introduce a lease role and use their current value, a likely unoccupied level, and the probable rate increases over time to achieve the experiment.