Property Valuation
The cost approach to appraisal is MOST reliable when:
AThere are many comparable sales in the area
BThe property is income-producing and has stable cash flows
CThe property is new construction or has unique improvements with few comparables✓ Correct
DThe subject property is vacant land
Explanation
The cost approach is most reliable for new construction (where depreciation is minimal) and unique properties with few comparables, such as churches, schools, or special-use facilities.
Related Alabama Property Valuation Questions
- Which of the following best describes an arm's length transaction used as a comparable sale?
- When appraising a property using the income approach, stabilized NOI is used rather than actual current NOI because:
- An appraisal report must comply with which set of professional standards?
- Which type of depreciation is associated with an outdated floor plan in a house?
- Which approach to value is most commonly used to appraise single-family residences?
- An operating expense for an investment property that is NOT included when calculating NOI is:
- Net operating income minus debt service equals:
- An appraisal that understates value is called:
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