It may be appropriate for a real estate professional to utilize different approaches for estimating the market value of a property depending upon the particular property type and use. Which of the following approaches would be most applicable when considering the valuation of retail office space (i.e., which approach would receive the most weight in the valuation process)?
A) Income approach
B) Sales comparison approach
C) Cost approach
D) Investment approach

Question

Quizplus · Accepted Answer

The income approach is most applicable when valuing income-generating properties, such as retail office space. This approach considers the current and potential future income generated by the property and applies a capitalization rate to determine its value. The sales comparison approach may also be used to support the determined value, but the income approach should receive the most weight in the valuation process. The cost approach is typically used for new construction or specialized properties, and the investment approach is more appropriate for properties with multiple income streams or for investors looking to evaluate a property's potential return on investment.

It May Be Appropriate for a Real Estate Professional to Utilize