Property Valuation
An appraiser determines a property's value by the cost to replace it, minus depreciation, plus land value. This is the:
ASales comparison approach
BIncome approach
CCost approach✓ Correct
DGross rent multiplier method
Explanation
The cost approach estimates value by calculating the cost to replace or reproduce the improvements, subtracting depreciation, and adding the land value.
Related Alabama Property Valuation Questions
- When an appraiser concludes that the cost approach results in a significantly higher value than the sales comparison approach, this may indicate:
- A property generates $60,000 in annual net operating income. If the cap rate is 8%, what is the property's estimated value?
- When appraising a property using the income approach, stabilized NOI is used rather than actual current NOI because:
- Functional obsolescence caused by a feature that is considered outdated or undesirable is called:
- Which type of depreciation is caused by factors outside the property, such as a nearby industrial facility?
- Effective age of a building differs from actual (chronological) age because effective age:
- In the cost approach, economic life refers to:
- The principle of substitution states that:
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