Professional appraisers use three approaches to value real estate: the income approach (capitalize NOI by a market cap rate), the sales comparison approach (price per square foot from comparable sales applied to the subject), and the cost approach (land value plus replacement build cost minus accumulated depreciation). Our property value calculator runs all three using your inputs and produces a blended value, helping you triangulate fair market value the same way a licensed appraiser would. It also reports the implied cap rate at the blended value so you can sanity-check whether the income reconciles with what comparable properties are selling for.
Enter the annual NOI and market cap rate (leave blank if not income-producing).
Enter a comparable sale price, its square footage, and your subject's square footage.
Provide the land value, replacement build cost per sqft, and accumulated depreciation.
Review the three values and the blended average; check if they agree closely.
Each approach captures a different aspect of value. Income works best for rental and commercial properties where NOI is reliable. Sales comparison is most reliable for owner-occupied homes with active markets and good comps. Cost approach is best for new construction, special-purpose buildings, or insurance valuation. When the three approaches agree, you have high confidence in the value. When they diverge, the gap tells you something about the market — for example, when income value is far below comps, the market is appreciation-driven.
Income: V = NOI / Cap Rate • Sales Comp: V = Comp $/sqft × Subject sqft • Cost: V = Land + Build − Depreciation
Income approach works best for income-producing properties — rentals, commercial, multifamily
Sales comparison needs at least 3 truly comparable sales within the last 6 months
Cost approach is most useful for new construction or unique properties without comps
When all three approaches agree within 10%, you have a confident valuation
When approaches diverge widely, investigate why — it usually reveals a market dynamic
Always verify the cap rate input matches actual closed sales in the area
Adjust comparable square footage for differences in age, condition, location, and lot size before using
Determining the fair market value of a property is both an art and a science. Professional appraisers rely on three established methodologies — the income approach, the sales comparison approach, and the cost approach — each suited to different property types and market conditions. The income approach divides net operating income (NOI) by a market capitalization rate, making it ideal for rental and commercial properties. The sales comparison approach uses recent comparable sales to estimate value per square foot, which works best in active residential markets. The cost approach adds land value to replacement construction cost minus depreciation, often used for unique or new-build properties. According to the Appraisal Institute, reconciling all three methods produces the most reliable estimate because each compensates for the others' blind spots. Whether you are buying a home, refinancing, evaluating a rental investment, or contesting a tax assessment, understanding these three approaches gives you the analytical framework that banks, insurers, and the IRS all rely on to establish property worth.
No single valuation method is perfect. Income approach can be distorted by atypical rents, sales comparison by stale or non-comparable sales, and cost approach by depreciation estimates. Using all three simultaneously protects you from any single method's weakness. Professional appraisers don't pick one — they reconcile across all three and give the most weight to whichever is most reliable for the property type.
When the three approaches all agree within ~10%, you have high confidence in the value. When they diverge, the gap is informative. Income value much higher than comps suggests rents are above market. Comps much higher than income suggests appreciation expectations are baked in. Cost value far above the others suggests overbuilding for the area. Always investigate the cause of any large divergence before trusting a single number.
Data sourced from trusted institutions
All formulas verified against official standards.