Valuation and Market Analysis
Valuation estimates a property's worth, and market analysis helps licensees price listings. Understanding depreciation and the approaches to value is essential.
Approaches to Value and CMAs
Appraisers use the sales comparison, cost, and income approaches, choosing the method that best fits the property type. A licensee's comparative market analysis (CMA) uses comparable sales to guide pricing but is not a formal appraisal. Formal appraisals must be performed by licensed or certified appraisers.
Types of Depreciation
Depreciation is loss in value from physical deterioration, functional obsolescence, or external obsolescence. Functional obsolescence comes from outdated design or features, while external obsolescence stems from negative influences outside the property. Only physical and functional causes are within the property's boundaries.