A licensed appraiser in Sarasota is appraising a historic courthouse that the city plans to convert into a community center. The building is 80 years old, has architectural significance, and will not generate income. Which appraisal approach is most appropriate for this assignment?
Correct Answer
B) Cost approach
The cost approach is most appropriate for unique, special-purpose properties like historic courthouses where comparable sales are unlikely to exist and income generation is not the purpose. The cost approach can account for the reproduction cost of the historic features. Sales comparison approach would lack adequate comparable properties for such a unique, special-purpose building. Income approach is inappropriate as the building will not generate income as a community center. Mass appraisal approach is used for large numbers of similar properties, not individual unique buildings.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A transfer tax is a tax imposed on the transfer of ownership of real estate.
Reconciliation is the final step in the appraisal process where the appraiser analyzes the value indications from all applicable approaches and arrives at a single final opinion of value. It is not a simple average of the three values.
The comparable sales approach estimates a property's value by comparing it to similar properties that have recently sold in the same market area. It is the most widely used and reliable approach for appraising residential properties.
More Valuation Appraisal Questions
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Previous Question
A Florida appraiser is reconciling three approaches for a commercial property: Sales Comparison Approach indicates $3,200,000, Cost Approach indicates $3,800,000, and Income Approach indicates $3,400,000. If the appraiser assigns 60% weight to income approach, 30% to sales comparison, and 10% to cost approach, what is the reconciled value?
Next Question
When applying the cost approach in Florida, an appraiser must consider all of the following types of depreciation EXCEPT: