An appraiser who is appraising a school would most likely use which valuation approach?
- market approach
- comparable sales approach
- income capitalization approach
- cost approach
The answer is D – cost approach.
The cost approach is generally used to appraise unique special purpose properties such as schools, libraries, and churches. The cost approach is used because there are few comparable properties given the unique nature and the fact that they bring in no rental income.
Note that both A and B are just different names for the same approach to valuation – both market and comparable sales refer to the same approach. This is good to remember.