Reviewer for Real Estate Appraisal and Valuation for the Real Estate Broker board.
1
Three Approaches to Value
| Approach | Basis |
|---|---|
| Market (Sales Comparison) | Compare similar sold properties |
| Cost | Land + replacement cost − depreciation |
| Income | Capitalized rental income |
💡 Exam Hack
Use the Market approach for homes, the Income approach for rentals/commercial, and the Cost approach for unique/new buildings.
2
Principles of Value
Value is influenced by supply & demand, highest and best use, substitution, and location.
3
Income Capitalization
Value = Net Operating Income ÷ Capitalization Rate
4
Worked Example
A rental earns ₱240,000 NOI/year at an 8% cap rate.
Value = 240,000 ÷ 0.08 = ₱3,000,000
📌 Quick Recap — Master These
Before your exam, make sure you can confidently explain and apply each of the following:
- Three Approaches to Value
- Principles of Value
- Income Capitalization
- Worked Example
Re-read any section above where you hesitate, then explain it aloud in your own words — if you can teach it simply, you understand it. Focus your final review on the tables, formulas, and the common-mistake warnings, since those are where most points are won or lost.