HOME ABOUT US REFERENCES GLOSSARY


Definition
of Value

Market Approach
One of the three recognized approaches used in appraisal analysis, this approach involves the collection of market data pertaining to the subject assists being appraised.  This approach is also known as the "Comparison Sales Approach".  The primary intent of the market approach is to determine the desirability of the assets and recent sales or offerings of similar assets currently on the market in order to arrive at an indication of the most probable selling prices for the assets being appraised.  If the comparable sales are not exactly similar to the asset being appraised, adjustments must be made to bring them as closely in line as possible with the subject property.
 
Cost Approach
One of the three recognized approaches used in appraisal analysis, this approach is based on the proposition that the information purchaser would pay no more for a property than the cost of producing a substitute property with the same utility as the subject property.  It considers that they maximum value of the property of a knowledgeable buyer would be the amount currently required to construct or purchase a new asset of equal utility.  When subject asset is not new, the current cost must be adjusted for all forms of depreciation as of the effective date of the appraisal.
 
Income Approach
One of the three recognized approaches used in appraisal analysis, this approach considers value in relation to the present worth of future benefits derived from ownership and is usually measured through the capitalization of the specific level of income.  This approach is the least common approach used in the valuation of machinery and equipment since it is difficult to isolate income attributable to such assets.
 

Tel: 920-739-9530 * Cell: 920-202-2776 * fredfranke@aol.com

Home     About     Definition of Values
Equipment Appraisals.  All rights reserved.