3 Common Methods of Land & Property Appraisal
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Whether you’re looking to have an industrial property, investment property, private property, or land appraised in Florida, there are three common methods you’ll see an appraiser use. The sales comparison approach, cost analysis approach and income capitalization approach. The professionals at Moody Williams have over 40 years of experience servicing greater Jacksonville, Florida with thousands of successful appraisals to boot. Here are a few of the ways we identify the best method of appraisal for your land or property.
1. Sales Comparison Approach
This appraisal method is probably the most commonly used among appraisers today for both land and improved properties. The approach involves the appraiser doing substantial, in-depth research to identify comparable land or properties sold in the area and compare them to the subject property (or land). Each comparable sale is then adjusted appropriately for its inferior or superior characteristics. The values derived from the adjusted comparable sales form a range of values for the subject. The characteristics used to measure the correct adjustments include zoning, size, topography, location, and many others.
2. Cost Analysis Approach
The Cost Approach is based upon the principle of substitution, which states a prudent purchaser would not pay more for a property than the amount required to purchase a similar site and construct similar improvements without undue delay, producing property of equal desirability and utility. This approach is particularly applicable when the appraised improvements are relatively new or proposed or when the improvements are so specialized that there is little or no sales data from comparable properties.
3. Income Capitalization Approach
Another great appraisal method for income-producing properties is the income capitalization approach. The Income Approach to value is based on the present worth of the future rights to income. This type of analysis considers the property from an investor’s point of view with the basic premise being that the quantity and quality of the income stream are the basis for the value of the property given an expected rate of return to an investor. The market in which the subject property competes is investigated; comparable sales located and studied, contracts for sale investigated, and current offerings are reviewed. Factors such as operating expenses, capitalization rates, and net rental income are studied to determine how they affect the final sales price for the comparable sale. Once all of the market-extracted factors are studied, those indicators are applied to the subject property to provide an indication of market value. This approach is the best fit for investment properties that are able to generate income continuously (i.e., apartment property, retail, offices, and industrial properties).
However you decide to move forward with having your industrial property, investment property, private property, or land appraised, it’s important to get it done. As Floridians, we face various natural disasters that cause insurance rates to skyrocket. Due to living in a high-risk, yet incredibly beautiful part of the United States, it’s critical to ensure you’re in the know on what your land or property is worth, and the appraisal is accurate.
The professional appraisers at Moody Williams have been proudly serving Northeast Florida and greater Jacksonville for over 5 decades. We are happy to share our vast experience and help you get started on your investment property appraisal, industrial property appraisal, property or land appraisal. Call and speak to one of our appraisal experts today at 904-516-8900.