Property Valuation
The cost approach to value is most reliable when:
AThere are many comparable sales available
BThe property is new or nearly new and has little depreciation✓ Correct
CThe property generates significant rental income
DMarket conditions are declining rapidly
Explanation
The cost approach is most accurate for new construction or special-use properties where depreciation is minimal and comparable sales are scarce, because estimating depreciation on older structures introduces significant subjectivity.
Related Michigan Property Valuation Questions
- In Michigan, the 'abstraction method' (allocation method) of land valuation involves:
- In Michigan, an ARM's length transaction used in appraisal comparables means:
- The principle of substitution in Michigan appraisal means:
- Effective gross income (EGI) in Michigan property analysis equals:
- External obsolescence in appraisal refers to:
- External obsolescence affecting a Michigan property's value could be caused by:
- In Michigan, when a property is sold, its taxable value is:
- The income approach to value is most appropriate for appraising:
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