California Real Estate Practice Exam

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Which appraisal approach is most suitable for a strip mall?

  1. Cost approach

  2. Sales comparison approach

  3. Income capitalization approach

  4. Historical cost approach

The correct answer is: Income capitalization approach

The income capitalization approach is the most suitable for a strip mall because it takes into consideration the potential income that can be generated from the property. The cost approach would not accurately reflect the value of a strip mall as it does not account for potential income. The sales comparison approach may also not be suitable as there may not be enough comparable properties to accurately determine the value. The historical cost approach also does not take into account current market conditions and potential income. Therefore, the income capitalization approach is the best option for valuing a strip mall.

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