Various methodologies are used to determine property value. The sales comparison approach assesses a property by comparing it to recent sales of similar properties in the same area, adjusting for differences in features and conditions. The cost approach calculates value by adding the land value to the depreciated cost of constructing the building, particularly useful for new constructions. The income capitalization approach, often used for commercial properties, estimates value based on the property’s income, factoring in rental income, operating expenses, and capitalization rates.

Several factors affect real estate valuation, including location, property condition, market conditions, and economic factors. Location is a major determinant, with properties in prime areas generally valued higher. The physical condition of the property, such as its age, design, and maintenance, significantly impacts its value. Market conditions, like supply and demand dynamics, and broader economic factors, such as interest rates and employment rates, also play critical roles.