An Alaska property leased below market rent has which effect on its income-approach value?
Why Reduces value when the lower-than-market rent is used in the income approach Is Correct
Answer B: Reduces value when the lower-than-market rent is used in the income approach
Exam Tip: Property Valuation
Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.
Key Property Valuation Terms in This Question
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Key Terms to Know
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Fee SimpleThe highest and most complete form of property ownership — absolute ownership with the right to use, sell, or pass the property to heirs.
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