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1. Cost = Land Value + value of Depreciated Improvements;

2. Sales Comparison/Comparables - after adjusting for disimilar characteristics, including location, size, design and construction quality, age and other physical characteristics; and

3. Income = (Gross Income, adjusted for vacancy & collection) less Operating Expenses)/ Capitalization Rate.

There may be three approaches, but only #2 is used in residential lending.
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