Property Valuation
An Alaska appraiser is determining the value of a property in a remote area with no comparable sales. Which approach would likely be MOST useful?
ASales comparison approach
BCost approach✓ Correct
CIncome approach
DGross rent multiplier approach
Explanation
When comparable sales are scarce — as in remote Alaska areas — the cost approach (estimating land value plus depreciated cost of improvements) is often the most reliable alternative.
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Key Terms to Know
Gross Rent Multiplier (GRM)
A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Math Concepts
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