What is the primary advantage of using the cost approach for property valuation?
Correct Answer
D) It's most useful for newer properties or unique properties with few comparables
The cost approach is particularly useful for newer properties or unique properties where there are few comparable sales available. It estimates value by calculating the cost to replace the structure plus land value, minus any depreciation.
Why This Is the Correct Answer
The cost approach is most advantageous for newer properties or unique properties with few comparables because it doesn't rely on market sales data that may not exist or be relevant. For new construction, replacement costs are readily available and depreciation is minimal. For unique properties like churches, schools, or custom homes, comparable sales are scarce, making the cost approach the most reliable valuation method available.
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In Ontario, what is the key difference between an appraisal and a Comparative Market Analysis (CMA)?
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