In reconciling the income approach for an owner-occupied single-family home, its weight is usually:
Correct Answer
A) Low — the type trades on ownership appeal, not income
Why this is correct: For owner-occupied single-family homes, the income approach typically receives low weight because the primary buyer pool (owner-occupants) values ownership appeal, not investment income. Why the other choices are wrong: Dominant over the sales comparison approach in every case is false; sales comparison is usually primary. Equal to the other approaches by rule is incorrect; no rule mandates equal weighting. Whatever produces the highest value is not a proper reconciliation principle. Exam tip: Weight approaches based on the market's behavior, not a fixed rule.
Why This Is the Correct Answer
Why this is correct: For owner-occupied single-family homes, the income approach typically receives low weight because the primary buyer pool (owner-occupants) values ownership appeal, not investment income. Why the other choices are wrong: Dominant over the sales comparison approach in every case is false; sales comparison is usually primary. Equal to the other approaches by rule is incorrect; no rule mandates equal weighting. Whatever produces the highest value is not a proper reconciliation principle. Exam tip: Weight approaches based on the market's behavior, not a fixed rule.
More income-approach Questions
In a percentage lease, rent is commonly structured as:
Escalation clauses and expense stops in a lease matter to the income analysis because they:
In a DCF, what is the reversion?
Potential gross income differs from effective gross income in that PGI assumes:
The reversion in a discounted cash flow model represents:
Two identical buildings differ only in risk: one has a single tenant on a short lease, the other five tenants on staggered terms. How do their cap rates compare?
Contract rent on a leased office is $30 per sq ft; market rent is $26. The $4 difference is called:
Building A (new, credit tenant, 20-year lease) and Building B (older, month-to-month tenants) sell the same week. Their cap rates should differ how?
An appraiser is analyzing a 15-unit apartment building. Market research indicates a 6% vacancy rate is typical for similar properties, but this property's historical vacancy has averaged 4%. The subject has experienced a 1% collection loss (uncollectible rents) over the past two years. When estimating effective gross income for the subject, what vacancy and collection loss percentage should the appraiser apply?
An overall rate extracted from a sale whose NOI excluded reserves, applied to a subject NOI that includes them, will:
People Also Study
Valuation Principles & Procedures
25% of exam
Property Description & Analysis
20% of exam
Market Analysis & Highest/Best Use
15% of exam
Appraisal Math & Statistics
15% of exam
USPAP (Ethics & Standards)
15% of exam