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, using the current cost to replace the building
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.
Why This Is the Correct Answer
Insurance cover must pay to rebuild the structure, so the valuer needs its current replacement cost. The summation (cost) approach produces exactly that building cost, separate from land and market sentiment.
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More Valuation Questions
In applying the summation approach to value a heritage-listed property in Sydney, which additional factor must be specifically considered?
In Queensland, the statutory land valuation that councils use to levy rates is made by:
The comparable sales method of property valuation involves:
A Queensland property owner disagrees with the Valuer-General's valuation of their land. The owner may:
When valuing an income-producing property in Queensland using the capitalisation approach, a valuer primarily considers:
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- → A Comparative Market Analysis (CMA) prepared by a Queensland real estate agent differs from a formal valuation in that:
- → A developer in Queensland is considering purchasing a site for a residential subdivision. A valuer using the residual (hypothetical development) method would calculate the site's value by:
- → Which of the following factors would typically DECREASE the market value of a residential property in Queensland?
- → A Queensland seller asks an agent what her house is likely to sell for, and the agent decides to answer. What must he give her?
- → A Queensland agent recommends a reserve to a seller and must back it with a comparative market analysis. What should the CMA compare?
- → When conducting a property valuation in Queensland, what is the most critical consideration regarding comparable sales data?
- → What is the difference between 'site value' and 'capital value' as used by the Valuer-General in SA?
- → When valuing a rural property in SA, which of the following is a key factor that distinguishes it from suburban residential valuation?
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After completing an initial analysis, a valuer discovers that one comparable sale was between related parties at a below-market price. 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?