Property Valuation
When appraising new construction, the cost approach is often most appropriate because:
ANew homes have no comparable sales
BThere is no physical deterioration in a new building, making the cost approach closely aligned with market value✓ Correct
CNew construction must be appraised at cost by law
DThe income approach cannot be applied to new homes
Explanation
For new construction, physical depreciation is minimal and the cost approach closely reflects what the market would pay. There may also be limited comparable sales data for identical new construction, making the cost approach particularly relevant.
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