Property Valuation
Which appraisal approach would an appraiser most likely use to value a newly constructed home where there are no comparable sales in the immediate area?
AIncome approach
BGross rent multiplier approach
CCost approach✓ Correct
DReconciliation approach
Explanation
When there are few comparable sales (especially for new construction), the cost approach is often most reliable because the cost of land plus construction costs closely reflects current market value with minimal depreciation for a new home.
Related Colorado Property Valuation Questions
- The sales comparison approach to value is most commonly used for:
- The principle of 'highest and best use' in Colorado appraisal means:
- In the income approach to valuation, the capitalization rate (cap rate) is calculated as:
- A Colorado property with above-market fixtures (granite countertops in an entry-level neighborhood) suffers from:
- A Colorado real estate broker preparing a 'Comparative Market Analysis' (CMA) for a seller should:
- In the cost approach to appraisal, 'reproduction cost' differs from 'replacement cost' in that:
- In Colorado, an 'appraisal review' involves:
- A property manager tracks a building's 'break-even ratio.' The break-even point is when:
Practice More Colorado Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Colorado Quiz →