The method of creating an appraisal report consists of an inspection which forms an opinion of value. This opinion or estimate is concluded through the use of a formal process that commonly uses three "common approaches to value". One of the three is the Cost Approach - which is how much it would cost to replace the improvements, less physical deterioration and other factors, then adding the land value. The Sales Comparison Approach involves searching for comparable homes in the vicinity and discerning value based on comparing those homes to the house in question. The Sales Comparison Approach is commonly the most definitive and clearest indicator of value for a home. The Income Approach is generally used for figuring out the market value of income-producing properties based on what an investor would pay based on the amount of income a property would bring in.