Property Valuation
What is the primary appraisal method used to value income-producing commercial properties in Philadelphia?
ACost approach
BSales comparison approach
CIncome capitalization approach✓ Correct
DAssessed value approach
Explanation
The income capitalization approach is the primary valuation method for income-producing properties such as office buildings, apartment complexes, and retail centers in Philadelphia and throughout Pennsylvania. This approach converts anticipated future income into a present value estimate: Value = Net Operating Income (NOI) divided by Capitalization Rate. Market-derived cap rates are based on property type, location, and investment risk profile.
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