An appraiser in Fort Lauderdale is reconciling the three approaches to value for a small retail strip center. The cost approach indicates $1,200,000, the sales comparison approach indicates $1,350,000, and the income approach indicates $1,275,000. How should the appraiser determine the final value opinion?
Correct Answer
C) Analyze the reliability and applicability of each approach for this property type
The appraiser must analyze the reliability and applicability of each approach based on the quality of data, market conditions, and property type before determining appropriate weighting. Simply averaging the approaches ignores their relative reliability. Using the highest value is not objective. The income approach is typically most reliable for income-producing properties, not the sales comparison approach.
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A Jacksonville office building produces $450,000 in gross rental income annually. Operating expenses total $180,000 per year. If the market capitalization rate for similar properties is 8.5%, what is the indicated value using the income approach?
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