What is another name for the income approach in property appraisal?

The income approach in property appraisal is also known as the capitalization approach. This terminology is rooted in the method's focus on converting income generated by a property into an estimate of its value. The capitalization approach involves applying a capitalization rate to the expected income, effectively determining the present worth of future income streams. It is particularly useful for valuing income-producing properties, such as rental buildings or commercial real estate.

This approach is characterized by its reliance on the principle that the value of a property is directly related to the income it can earn. By capitalizing the net income, appraisers can arrive at a value that reflects the investment potential of the property. This concept is foundational in real estate appraisal, emphasizing the financial performance aspect of properties.

The other options refer to different methodologies in property appraisal. The investment approach, while related, isn't a standard term used in formal appraisal practice. The sales approach, also known as the sales comparison approach, focuses on recent sales of similar properties, while the comparative approach is generally associated with comparing properties based on physical characteristics. These alternative methods assess value differently and are not synonymous with the income or capitalization approach.