Illinois Real Estate Broker Exam — All Questions
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2 questions
Valuation
An appraiser valuing a single-family home in an established neighborhood would rely MOST heavily on which approach to value?
- a.Cost approach
- b.Sales comparison approach✓
- c.Income capitalization approach
- d.Gross rent multiplier approach
The sales comparison approach, which analyzes recent sales of similar nearby properties, is most reliable for single-family residences where comparable data is plentiful. The income approach is used mainly for income-producing property.
Valuation
The principle that a property's maximum value is set by the cost of acquiring an equally desirable substitute is the principle of:
- a.Substitution✓
- b.Conformity
- c.Contribution
- d.Anticipation
The principle of substitution holds that a buyer will pay no more for a property than the cost of an equally desirable substitute. It underlies the sales comparison approach to value.