Property Valuation
An appraiser using the income approach divides the net operating income by the capitalization rate to determine:
AGross rent
BProperty value✓ Correct
CVacancy rate
DOperating expenses
Explanation
Property Value = NOI ÷ Cap Rate. The income approach converts the income stream into an estimate of property value using this formula.
Related Alabama Property Valuation Questions
- An appraiser notes a comparable property sold for $300,000. The comparable has a pool, but the subject does not. The pool is estimated to contribute $15,000 in value. The appraiser should:
- In the income approach, which formula is used to estimate property value?
- Which principle of value explains why a retail property located on a busy intersection sells for more than an identical retail property on a quiet side street?
- The income capitalization approach to appraisal is MOST appropriate for:
- Which type of depreciation is generally considered incurable and originates from outside the property?
- An appraisal report for a single-family home mortgage most commonly uses which standardized form?
- In a declining market, a time adjustment to comparable sales would generally be:
- Net operating income minus debt service equals:
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