The cost approach to value is MOST appropriate for:
Why Special-use properties with few comparables, like schools or churches Is Correct
Answer B: Special-use properties with few comparables, like schools or churches
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
People Also Study
Related Arizona Questions
- An Arizona appraiser using the cost approach estimates the value of a home as follows: land value = $80,000; replacement cost new of improvements = $220,000; accumulated depreciation = $30,000. What is the estimated value?Property Valuation
- The sales comparison approach to value is MOST appropriate for:Property Valuation
- An Arizona appraiser calculates that a subject property has $75,000 of accrued depreciation on improvements with a reproduction cost of $300,000. The land value is $80,000. What is the indicated value by the cost approach?Property Valuation
- The sales comparison approach to value is MOST appropriate for appraising:Property Valuation
- A building cost $600,000 to build and has a useful economic life of 40 years. Using straight-line depreciation, what is the annual depreciation amount?Real Estate Math
- A property is depreciated using straight-line depreciation. The building (not land) cost $180,000 and has a 27.5-year useful life for tax purposes. What is the annual depreciation deduction?Real Estate Math
- Using the cost approach, a property has land valued at $80,000 and improvements that cost $320,000 to build but have depreciated 25%. What is the estimated value?Real Estate Math
- An apartment property has a gross scheduled income of $150,000, a 6% vacancy, and expenses of $55,000. If similar properties sell at a 7% cap rate and a 10x EGIM, what does the income approach indicate as value?Real Estate Math
Key Terms to Know
A reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
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.
Math Concepts
Study This Topic
Practice More Arizona Real Estate Questions
1,400+ questions covering all exam topics. Start free — no signup required.
Take the Free Arizona Quiz →