Opinion ID: 3218859
Heading Depth: 3
Heading Rank: 3

Heading: Appraisal: cost, income, and comparable sales

Text: To determine the real market value of property, appraisers generally consider three different approaches to valuation: cost, income, and comparable sales. OAR 150-308.205-(A)(2)(a) (requiring the consideration of cost, income, or sales comparison approaches); 8 Hewlett-Packard Co., 357 Or at 603. The cost approach estimates value from the cost that would be needed to construct a similar property; the income approach estimates value from the income that the property could be expected to generate; and the comparable sales approach estimates value from the prices paid for similar properties. See id. An appraiser must consider all three approaches, even if the appraiser ultimately cannot use one or more of them in developing the appraisal. OAR 150-308.205- (A)(2)(a) (recognizing that some approaches cannot be applied to a particular property, but “each [approach] must be investigated for its merit”); see Hewlett-Packard Co., 357 Or at 603. When an appraiser uses more than one approach, the resulting values suggested by each approach may not be identical. The appraiser then must reconcile those value indications into a single, final value. Id.; see also Appraisal Institute, The Appraisal of Real Estate 65 (12th ed 2001) (“The final analytical step in the valuation process is the reconciliation of the value indications derived into a single dollar figure or a range into which the value will most likely fall. The nature of reconciliation depends on the appraisal problem, the approaches that have been used, and the reliability of the value indications derived.”). 8 OAR 150-308.205-(A)(2)(a) provides: “For the valuation of real property all three approaches—sales comparison approach, cost approach, and income approach—must be considered. For a particular property, it may be that all three approaches cannot be applied, however, each must be investigated for its merit in each specific appraisal.” 828 Dept. of Rev. v. River’s Edge Investments, LLC