Property Valuation
When appraising a newly constructed building with no prior sales history, the appraiser would most heavily rely on the:
ASales comparison approach
BIncome approach
CCost approach✓ Correct
DGross rent multiplier approach
Explanation
For newly constructed buildings with no prior sales history, the cost approach is most reliable because it directly reflects the cost to construct the improvements, and depreciation is minimal. The cost approach formula (land value + improvement cost − depreciation) works best when the improvements are new and there are few comparable sales.
Related Illinois Property Valuation Questions
- When performing a comparative market analysis (CMA), a real estate agent is providing:
- In the cost approach, 'replacement cost new' differs from 'reproduction cost new' in that:
- What is a 'complete appraisal' versus a 'limited appraisal' under USPAP?
- What is 'desk review' versus 'field review' appraisal in Illinois?
- The gross rent multiplier (GRM) method is used to quickly estimate the value of:
- In the cost approach, replacement cost differs from reproduction cost because replacement cost is:
- In the cost approach to value, the appraiser estimates the value of land separately from improvements because:
- Functional obsolescence in a property appraisal refers to:
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