Property Valuation
In Michigan, which is a characteristic of the income capitalization approach that distinguishes it from the sales comparison approach?
AIt requires direct comparison to recent property sales
BIt converts an income stream into a value estimate using a capitalization rate✓ Correct
CIt estimates the cost to rebuild the property
DIt is used exclusively for single-family homes
Explanation
The income capitalization approach converts future income streams (NOI) into a present value estimate by dividing by a capitalization rate. The sales comparison approach relies on recent comparable sales, and the cost approach estimates replacement cost minus depreciation.
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