A valuer is assessing a 15-year-old commercial building for insurance replacement purposes. Which valuation approach would be most appropriate?
Correct Answer
C) Summation approach using replacement cost
For insurance replacement purposes, the summation approach is most appropriate as it calculates the cost to replace the building with a similar structure. This approach focuses on replacement cost rather than market value or income potential.
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A valuer discovers that a comparable sale was between related parties at below-market price after completing their initial analysis. According to API standards, what is the most appropriate course of action?
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A valuer is assessing a 20-year-old industrial building for mortgage security purposes. The building has significant functional obsolescence due to low ceiling heights that don't meet current industry standards. How should this be addressed in the summation approach?