The Income Approach to Property Valuation

The introduction explains the purpose of the income approach to property valuation, which is to estimate the value of real estate by analyzing the future income it is expected to generate. Rather than focusing only on construction cost or comparable sales, this approach evaluates a property’s investment potential.

Key points include:

• Market value is defined as the estimated price at which a property would exchange between a willing buyer and a willing seller in an arm’s-length transaction, with both parties acting knowledgeably and without compulsion.