Property Valuation
Which type of property typically requires the income approach as the primary method of valuation?
ASingle-family residence
BVacant land
CApartment complex✓ Correct
DOwner-occupied condominium
Explanation
Income-producing properties such as apartment complexes are typically valued using the income approach because buyers in this market make decisions based on the property's ability to generate income.
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Key Terms to Know
Private Mortgage Insurance (PMI)
Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
ZoningLocal government regulations that control land use by dividing areas into zones specifying permitted uses, building sizes, and densities.
VarianceOfficial permission to use land in a way that does not conform to the applicable zoning ordinance, granted by a zoning board when strict enforcement would cause undue hardship.
Eminent DomainThe power of government to take private property for public use, with the requirement to pay the owner just compensation.
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