Which approach must always be considered when determining property value?

In property appraisal, all three primary approaches—cost, market, and income—must be considered to arrive at a comprehensive and accurate determination of a property's value. Each approach provides a different perspective based on varying methodologies and assumptions.

The cost approach estimates value based on the cost to replace or reproduce the property, minus any depreciation. This approach is particularly useful for new constructions or unique properties where recent construction data is available.

The market approach, often referred to as the sales comparison approach, evaluates property value based on comparable sales in the area. This is typically the most widely used method in residential appraisals because it reflects current market conditions and buyer behavior.

The income approach focuses on the property's ability to generate income, which is particularly relevant for investment properties. This method calculates value based on the present worth of anticipated future cash flows.

Considering all three approaches allows an appraiser to cross-verify and validate the estimated property value, ensuring a well-rounded analysis. Each method caters to different property types and circumstances, making it crucial to incorporate them all for a reliable valuation.