Property Valuation
What is the 'cost approach' to property valuation and when is it most useful?
AEstimating value based on rental income; most useful for single-family homes
BEstimating value based on land value plus depreciated cost of improvements; most useful for special-use or new properties✓ Correct
CEstimating value based on comparable sales; most useful for commercial properties
DEstimating value based on tax assessment; most useful when no sales data exists
Explanation
The cost approach estimates value as land value plus the depreciated replacement cost of improvements. It is most useful for special-use properties (churches, schools, government buildings) with few comparable sales, new construction, and for insurance purposes.
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