Question

Real Estate Finance: Of three standard valuation methods (comparable sales, income and replacement cost), describe which...

Real Estate Finance:

Of three standard valuation methods (comparable sales, income and replacement cost), describe which is most appropriate for the property type:

Valuation Method Property Type
A. Single Family Home
B. Church
C. Office Building
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Answer #1

A. Single family home would be used with comparables sales method and they will be trying to compare the value of the single home with the Other properties which are around in the same area and they will be trying to arrive at Valuation.

B. Church is often used with replacement cost because this is not an income generating property and it is used to find with the replacement cost of this asset and it is used to find out the valuation replacement cost

C. office building are related to generation of future cash flows in nature and they will be discounted with income method and they will be used with income capitalisation by capitalising all the cash flows which are available in the future related to the office building.

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