IAAO - International Association of Assessing Officers Exam with Frequently Asked Questions and Verified Answers

IAAO - International Association of Assessing Officers Exam with Frequently Asked Questions and Verified Answers Which valuation approach is generally considered the most appropriate for estimating the market value of a newly constructed special-purpose building with few comparable sales? A. Sales comparison approach B. Cost approach C. Income capitalization approach D. Gross rent multiplier approach Correct Answer: B. Cost approach Rationale: The cost approach is most applicable to new or special-purpose properties because replacement or reproduction cost can be estimated with relatively little depreciation, while comparable sales and income data are often limited. An appraiser adjusts the sale prices of comparable properties to account for differences in location, age, and amenities. Which valuation approach is being applied? A. Cost approach B. Income capitalization approach C. Sales comparison approach D. Residual land approach Correct Answer: C. Sales comparison approach Rationale: The sales comparison approach estimates value by analyzing recent sales of similar properties and making adjustments for differences between the comparables and the subject property.