Which Appraisal Method Is The Best?

Which Appraisal Method Is The Best?
November 22, 2025
Eagle Home Appraisal Team

Appraising real estate isn't a one-size-fits-all process. Depending on the type of property and its intended use, appraisers rely on three distinct methods to determine value. But is one "better" than the others? The answer depends entirely on the property itself.

1. The Sales Comparison Approach

Best for: Single-family homes and residential condos.

This is the most common method for residential real estate. It involves comparing the subject property to similar homes ("comps") that have sold recently in the same area. The appraiser adjusts for differences in size, condition, and features. For most homebuyers in Missoula, this is the method that matters most because it reflects what buyers are actually paying in the current market.

2. The Cost Approach

Best for: New construction or unique properties (like schools or churches).

This method assumes that a buyer wouldn't pay more for a property than it would cost to build an equivalent one from scratch. It calculates the value of the land plus the cost to replace the building, minus depreciation. It's less reliable for older homes where depreciation is hard to estimate accurately.

3. The Income Approach

Best for: Investment properties, rentals, and commercial buildings.

This approach values a property based on the income it generates. It uses data like rental rates and operating expenses to calculate a present value. For a standard family home, this method is rarely used unless the property is being purchased specifically as a rental.

Conclusion

There is no single "best" method. A professional appraiser will often consider all three but will place the most weight on the approach that is most applicable to the specific property type. For the vast majority of residential transactions in Missoula, the Sales Comparison Approach is the gold standard.

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