What are the three primary approaches used in real estate appraisal?

The three primary approaches used in real estate appraisal are the Cost Approach, the Sales Comparison Approach, and the Income Approach. Each method serves a distinct purpose and is utilized based on the type of property being appraised and the purpose of the appraisal.

The Cost Approach focuses on determining what it would cost to replace or reproduce a property, minus any depreciation. This method is particularly useful for new constructions or special use properties where comparable sales may not be available.

The Sales Comparison Approach relies on comparing the subject property to similar properties that have recently sold in the same area. This method is effective for residential properties where there is a sufficient data set of recent sales to provide a solid basis for appraisal.

The Income Approach assesses the value of a property based on its ability to generate income, often used for investment properties like apartments or commercial buildings. It involves analyzing the potential income the property can produce, adjusted for expenses, to arrive at a value.

This combination encompasses a comprehensive method for evaluating real estate, making option B the correct choice. The other options include approaches or concepts that do not fit within the three primary methods recognized in conventional real estate appraisal practices.