Property Valuation
What is the 'cost approach' best suited for?
AValuing income-producing apartment buildings
BValuing unique properties, special-use buildings, or new construction where comparable sales are limited✓ Correct
CValuing vacant land
DValuing properties in foreclosure
Explanation
The cost approach is most reliable for special-use properties (schools, churches, government buildings), new construction, and unique properties where comparable sales and income data are limited. It estimates value as the land value plus the depreciated replacement cost of improvements.
Related California Property Valuation Questions
- External obsolescence (economic obsolescence) differs from other depreciation types because it is:
- What is a Broker Price Opinion (BPO) and how does it differ from an appraisal?
- An appraiser is reconciling three value indicators from the three approaches: Cost approach = $485,000; Sales comparison approach = $475,000; Income approach = $460,000. The subject is an owner-occupied single-family home. Which approach should receive the most weight?
- An appraiser uses the 'before and after' method when appraising property affected by:
- A seller has a home with market value of $750,000. The seller wants to net $700,000 after paying a 6% commission. Can the seller achieve this by listing at $750,000?
- Highest and best use is defined as the use that is:
- The principle of conformity states that:
- What is 'economic obsolescence' in property appraisal?
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