Property Valuation
A Mississippi appraisal assignment requires the appraiser to estimate value for a proposed subdivision that will take 3 years to fully develop and sell. The appropriate method is:
ASimple comparable sales analysis
BA discounted cash flow or lot absorption analysis accounting for the time, cost, and risk of development✓ Correct
CCost approach only
DIncome capitalization based on first-year sales only
Explanation
For proposed subdivisions and development projects, appraisers use a discounted cash flow (DCF) or lot absorption analysis — estimating projected lot sales over the sell-out period, deducting development costs, and discounting the resulting cash flows back to present value to reflect time, cost, and entrepreneurial profit.
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