What are the three main approaches to the Valuation or Appraisal Process?

The three main approaches to the Valuation or Appraisal Process are indeed Capitalization of Income, Sales Comparison, and Cost Approach.

The Capitalization of Income approach is primarily used for income-producing properties. It estimates value based on the income expected to be generated by the property, capitalizing that income into a present value. This method is particularly effective for investment properties where future cash flows can be reliably projected.

The Sales Comparison approach involves looking at the sale prices of similar properties in the same area to determine the value of the property in question. This method leverages the principle of substitution, which states that a buyer would not pay more for a property than the cost to acquire a similar one.

The Cost Approach determines value based on the cost to replace or reproduce a property, minus depreciation. This method is often used for new constructions or unique properties where comparable sales data may not be readily available.

Together, these three approaches provide a comprehensive framework for valuing properties, catering to different property types and market conditions. The other options provided include terms and methods that do not align with the recognized appraisal approaches, such as Historical Cost and various inaccurately described approaches, which are more specific or not standard in the appraisal profession.