What is the summation (cost) approach to property valuation?
Correct Answer
D) Land value plus the depreciated replacement cost of the improvements on it.
The summation (cost) approach estimates value by adding the land value (assessed by direct comparison) to the depreciated replacement cost of all improvements. It is useful for specialised properties where comparable sales data is limited.
Why This Is the Correct Answer
The summation approach adds the value of the land, found by direct comparison, to the depreciated replacement cost of the buildings and other improvements. It is used where sales evidence is limited, such as for special-purpose property.
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