In Alaska, an appraiser estimating the value of a large tract of remote land may use the 'subdivision analysis' approach, which involves:
Why Estimating the retail value of developed lots, deducting development costs and profit, and discounting to present value Is Correct
Answer B: Estimating the retail value of developed lots, deducting development costs and profit, and discounting to present value
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.
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- An appraiser uses the cost approach for a property and estimates reproduction cost new at $380,000, land value at $75,000, and total depreciation at $55,000. What is the estimated value?Property Valuation
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Key Terms to Know
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Math Concepts
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