Sales Comparison Approach

Since VA relies exclusively on the sales comparison approach to value (except in very unusual circumstances involving inadequate or no comparable sales available or an extremely unique property), the VA value estimate should never exceed that indicated by the sales comparison approach. 

This approach recognizes that a well-informed purchaser will generally pay no more for a property than the cost of acquiring a similar property of equal desirability and utility without undue delay. 

Cost Approach

Since the residential real estate market does not base transaction decisions on a property’s reproduction or replacement cost, the cost approach to value may only be used to support the sales comparison approach in the final reconciliation. 

Appraisers do not have to report the cost approach for VA purposes, unless it is applicable to the appraisal as indicated above.

Income Approach

If the appraisal involves an income-producing property (more than one living unit), the appraiser will use value estimates developed through both the income approach and the sales comparison approach in the final reconciliation.