What best describes the income approach to value?
Correct Answer
A) A method that estimates value from the income or market rent the property can be expected to earn
The income approach estimates value from the income stream or market rent a property can be expected to generate. It is grounded in the idea that buyers of income property pay for the economic benefit the property can produce, not simply for its physical components or original cost.
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More Valuation Market Analysis Questions
A buyer in Rochester is pre-approved for a conventional mortgage and wants to purchase a co-op apartment. What should the buyer's agent explain about financing a co-op purchase in New York?
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- → An appraiser is using the income approach to value a 12-unit rental building in Brooklyn. The building generates $180,000 in annual gross rental income. Operating expenses total $54,000 annually. The appraiser determines that a 7.5% capitalization rate is appropriate for this type of property in this location. What is the indicated value using the income approach?
- → An example of functional obsolescence is:
- → The best method to determine fair market value is:
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- → Under federal law, which type of loan typically does NOT require a property appraisal?
- → FIRREA (Financial Institutions Reform, Recovery, and Enforcement Act) requires:
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Previous Question
In September 2026, Appraiser Noor inspects a 35-year-old house with aging plumbing lines buried inside the walls and a worn structural frame component near the end of its useful life. Replacing the items now would require major reconstruction and is not economically justified. In the cost approach, this is best classified as what?
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In April 2026, broker Lena Ortiz is pricing a four-unit property on Maple Avenue in a neighborhood with an active rental market. Why is the income approach especially relevant to her analysis?