Colorado Real Estate Broker Exam — All Questions

An appraiser valuing a single-family home in an established neighborhood relies mainly on recent sales of similar nearby homes, adjusting for differences. Which approach to value is being used?

• a.Income capitalization approach
• b.Sales comparison approach✓
• c.Cost approach
• d.Gross rent multiplier approach

The sales comparison approach estimates value by analyzing recent sales of comparable properties and adjusting for differences such as size, condition, and location. It is the primary method for residential appraisal because an active market of similar homes exists. The income approach fits rental property, and the cost approach fits new or special-use property.