Step One: Definition of  the Problem
  • Identification of the real estate and property rights to be valued as well as the use of the appraisal
  • Definition of Value is developed as well as the Date of Value Estimate is established.
  • Description of the scope of  the report is developed as well as information regarding Limiting

Step Two: Preliminary Analysis and Data Selection and Collection
  • General (Region City and neighborhood): Social, economic, governmental, and environmental
    aspects of area.
  • Specific (Subject and comparable): Site and improvements, cost and deprecation,
    income/expensives and capitalisation rate, history of ownership and use
  • Competitive Supply and Demand(Subject Market): Inventory of competitive properties, sales and
    listings, vacancies, absorption, demand studies

Step Three: Highest and Best Use Analysis
  • Land as though vacant
  • Property as improved
  • Sometimes HBU is specified in terms of use, time, and market participants.
  • Subsequent site/land valuation as needed.

Step Four: Application of the Three Approaches to Value
  • Cost Approach: the improvements are theoretically reproduced, subtractions are made for
    physical, functional and/or external obsolesce and a site value is added.
  • Sales Comparison: Methodically compares the subject property with similar and verified sales
    using a detailed grid analysis showing dollar or percentage adjustments with explanations.
    Value indicators are weighed to estimate value.
  • Income Approach: Verified comparable rentals are analyzed. Vacancy and expense estimates are
    made from property history and the market. The Net Operating Income is used with a capitalized
    data supported rate and/or a discounted cash flow is developed. A value from these indicators is

Step Five: Reconciliation of Value Indicators and Final Value Estimate

Prepared by Robert D. Congdon, Jr. MAI, SRA, using The Appraisal of Real Estate, 13th Edition.
Phone: 607-757-0435
Fax: 607-757-0742