Property Valuation
In a Florida appraisal, the 'cost approach' is most reliable for which type of property?
AOld residential properties with significant deferred maintenance
BNew or nearly new buildings or special-use properties with few comparables✓ Correct
CVacant land parcels in urban areas
DLarge apartment complexes with strong rental history
Explanation
The cost approach is most reliable for new or nearly new buildings (minimal depreciation) and for special-use properties (churches, schools, hospitals) that have few comparable sales. For older properties, depreciation estimation becomes subjective and less reliable.
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Key Terms to Know
Appraisal
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Math Concepts
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