By an on-site inspection of both land and all improvements. A drawing of all new improvements is made giving the dimensions. The square footage area is figured and the type of construction such as brick, frame, etc. is determined. Then, the value is determined through the use of the three approaches to value as follows:
- Market Data or Comparative Sales Approach - the application of this approach obtains an estimate of value of property by comparing it with similar properties recently sold in the same area. The fair market value obtained by this approach might be described briefly as "the price paid by a willing buyer to a willing seller, neither being under abnormal pressures."
- Cost Approach - the current cost of reproduction, less accrued depreciation of all types (physical, functional, and economic), plus the value of land as determined by comparative sales, provides an estimate of the market value of a property in this approach.
- Income Approach - market value is estimated in this approach by capitalizing the income earnings a commercial or industrial property is capable of producing.