An appraiser must value a special-purpose building in British Columbia, such as a municipal fire hall, that has no comparable sales and produces no rental income. Which approach is usually most appropriate?
Correct Answer
B) Cost approach
When a property is special-purpose, with no comparable sales and no income stream, the direct comparison and income approaches lack the data they need. The cost approach, which estimates land value plus the depreciated cost to replace or reproduce the improvements, is the approach that can still be applied.
Why This Is the Correct Answer
This answer is correct. With no sales to compare and no income to capitalize, the cost approach (land value plus depreciated replacement cost) is the approach that can be applied.
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