Property Valuation

Property valuation is the systematic estimation of economic worth using recognized methodologies including sales comparison, income capitalization, and cost approaches.

Valuation MethodFormula/Approach
Sales comparisonAdjust comparable sales for differences
Income capitalizationValue = NOI / Cap rate
Gross rent multiplierValue = Annual rent times GRM
Discounted cash flowPresent value of projected cash flows
Cost approachReplacement cost minus depreciation
Method ApplicationBest Use
Sales comparisonResale residential, active market
Income capitalizationInvestment properties, rental income
DCFMulti-year analysis, development projects
Cost approachNew construction, unique properties
ReconciliationWeight methods based on reliability


Related Terms

Fair Market Value Cap RateComparable Sales (Comps)Discounted Cash Flow (DCF)Net Operating Income (NOI)

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