Property Valuation
When an appraiser concludes that the cost approach results in a significantly higher value than the sales comparison approach, this may indicate:
AThe property should be demolished immediately
BThe building has significant depreciation or the market values the property below replacement cost✓ Correct
CThe comparable sales were incorrect
DThe appraiser made an error in the cost approach
Explanation
When the cost approach exceeds the sales comparison approach, it typically indicates that the market is not paying replacement cost — possibly due to depreciation, functional obsolescence, or a buyers' market.
Related Alabama Property Valuation Questions
- In Alabama, property is assessed for tax purposes at what percentage of fair market value for residential property?
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- The principle of 'progression' in real estate value states that:
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