Property Valuation
The cost approach to value is best suited for:
AApartment complexes with stable rental income
BNew or special-use properties with few comparable sales✓ Correct
CProperties being sold under foreclosure
DRaw land with no improvements
Explanation
The cost approach estimates value by calculating the cost to replace the improvements, less depreciation, plus land value. It is most reliable for new construction and unique/special-use properties where comparable sales are scarce.
Related California Property Valuation Questions
- In a 'buyer's market,' real estate prices tend to:
- In the income approach, what is the 'capitalization rate' (cap rate)?
- Under the principle of conformity, property values are maximized when:
- Which type of depreciation results from factors outside the property, such as proximity to a freeway or an industrial plant?
- The principle of 'substitution' in real estate valuation holds that:
- Gross Rent Multiplier (GRM) is calculated as:
- Under USPAP (Uniform Standards of Professional Appraisal Practice), a licensed appraiser must retain the workfile for a completed appraisal for a minimum of:
- What are the three standard approaches to property valuation?
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