What are the three main approaches used in property valuation?

The approach that comprises Cost, Direct Comparison, and Income is recognized as the three primary methodologies for property valuation.

The Cost approach evaluates the value of a property based on the cost to replace or reproduce the asset minus any depreciation. This method is particularly applicable for new properties or unique structures where comparable sales data may be scarce.

The Direct Comparison approach, often referred to as the Sales Comparison method, leverages recent sales data from comparable properties to assess a property's market value. By comparing homes with similar characteristics and adjusting for differences, this method provides a clear, market-driven valuation.

The Income approach assesses a property's value based on the income it can generate, emphasizing its potential profitability. This technique is particularly relevant in the case of investment properties, where future cash flows and return rates are critical.

These three methodologies are foundational in real estate valuation because they offer a comprehensive framework to assess different types of properties based on cost considerations, market behaviors, and income potential. Other approaches mentioned in the incorrect options do not encapsulate the full spectrum of widely utilized property valuation techniques in practice.