Property Valuation
The principle of balance in appraisal states that:
AAll three approaches to value must be used in every appraisal
BThe combination of land uses and components that produces maximum value defines the ideal balance for a property✓ Correct
CProperties should have equal amounts of land and improvement value
DIncome and expenses must balance for an accurate cap rate
Explanation
The principle of balance holds that maximum value is achieved when the elements of production (land, labor, capital, coordination) are in proper proportion. Over-improvement or under-improvement creates imbalance and reduces value.
Related Arkansas Property Valuation Questions
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