The three core approaches to property valuation

1. Market approach

Uses recent transactions or other suitable market evidence for similar properties, followed by supported adjustments. For conventional housing it is often the most direct approach when the market provides enough relevant evidence.

• Same micro-market and valuation date
• Similar type, size, age and condition
• Verified sale prices separated from asking prices

What makes a comparable relevant

Geographic proximity is not enough. The evidence should come from the same competitive market and be similar in use, area, age, floor, quality, condition and time. Price provenance matters too: a live asking price and a verified transfer are not the same class of evidence.

Every adjustment needs a direction, magnitude and rationale. If adjustments dominate the result, the comparable is probably weak no matter how close it is on a map.

2. Income approach

Converts net operating income into an indication of value through direct capitalization or DCF. It is central for investment property, but highly sensitive to market rent, vacancy, operating expenses and the capitalization rate.

An in-place contract can sit above or below market, so contract rent must be separated from market rent and the assumptions tested. Gross yield is a quick metric, not a complete valuation method.

3. Cost approach

Adds land value to the depreciated replacement cost of improvements. It is useful for new or specialized properties and as a cross-check, but depends on supportable land value, present-day cost and depreciation.

A materials-price index can support time adjustment; it is not a ready-made cost per square metre. Replacement cost also needs labour, professional fees, specification, time and local conditions.

From inputs to an indication

Each method should display its valuation date, input provenance, assumptions, excluded evidence and sensitivity. The same equation can produce very different result quality when fed different evidence.

In an automated workflow, approaches remain separate modules. That makes QA, backtesting and abstention possible when a required input is missing instead of hiding the gap in an arbitrary average.

Reconciliation is not an average

A valuer weighs the relevance and reliability of each approach for the intended use. An owner-occupied apartment may rely mainly on comparables; a leased investment property may give greater weight to income.

KTIMIO shows indications side by side and does not create a blended value from unsupported user assumptions. Divergence between methods is diagnostic: it points to an assumption or evidence class that needs review.

Three numbers do not mean greater accuracy. They mean three different checks.

Sources and further reading

Curated primary standards, official guidance and foundational research. Source register reviewed 31 August 2026.

1. RICS — RICS Valuation — Global Standards (Red Book) (2025)Global standards covering bases of value, approaches, methods, models and reporting requirements.
2. IVSC — International Valuation Standards (2025)International framework with dedicated requirements for Data & Inputs and Documentation.
3. TEGOVA — European Valuation Standards — 10th edition (2025)European framework for Market Value, reports, methodology and energy efficiency.
4. RICS — Comparable evidence in real estate valuation (2023)Selection, verification, analysis and adjustment of comparable evidence.
5. IAAO — Standard on Mass Appraisal of Real Property (2023)Model specification, calibration, data quality and out-of-sample testing for mass appraisal.
6. Journal of Property Investment & Finance — Real estate appraisal: a review of valuation methods (2003)Review of conventional and advanced real-estate valuation methods.