The appraiser determines the age, quality, location, condition, style and size of the property. The appraiser then uses one or more of the following three methods to appraise property at "market value":
The Market Approach: sales of similar property are compared to each other. The appraiser then adjusts for differences (for example, one house may have more square footage than another). This method works well for valuing homes.
The Cost Approach: the cost to replace your property is adjusted for age and condition. This approach works well for new and unique properties.
The Income Approach: in general terms, income from rent is used to value property. This method works well for income producing properties (for example, apartment building and malls).