Property Valuation
In South Dakota, which type of property would MOST LIKELY be appraised using the cost approach as the primary method?
AA Sioux Falls residential duplex with active comparable sales
BA Rapid City elementary school✓ Correct
CAn Aberdeen commercial strip center
DA Mount Rushmore area vacation rental
Explanation
Special-use properties like schools, churches, and government buildings have few comparable sales and generate no income, making the cost approach the most reliable primary method.
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Key Terms to Know
Gross Rent Multiplier (GRM)
A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
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