Common use of Income Approach Clause in Contracts

Income Approach. Consideration of the income approach to value will be made when the income or potential income generated by the real estate is deemed likely to affect the property’s resale value. Data to be analyzed will include economic rents, typical vacancy rates and typical operation expense ratios. In the valuation of property by the income approach, adequate records will be prepared, showing a reconstruction of income and expenses, as well as all calculations used to arrive at market value, including formulas and capitalization rates as appropriate to the type of property being appraised.