Cost Components of Real Estate Valuation


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An appraiser has been called in to evaluate a property located in an area of Boston which is deemed an historic district. The appraiser should be using the _____ to determine the approximate value.

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1. There are three different methods to estimate value of a property. The income approach, the sales comparison approach, and the _____ approach.

2. When conducting an evaluation of a commercial property, labor costs, material costs, and office equipment costs are all examples of _____ costs.

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About This Quiz & Worksheet

Use these questions to test yourself and find areas for future study. The questions ask you for definitions, approaches and formulas used in real estate valuation.

Quiz & Worksheet Goals

These resources cover the following topics:

  • Determining the best approach in different valuation situations
  • Recalling the types of cost found in commercial property evaluation
  • Knowing the different approaches to estimate property value
  • Choosing a formula to calculate entrepreneurial profit for appraisal
  • Outlining the cost approach and its definition

Skills Practiced

Skills you'll be able to practice:

  • Reading comprehension - ensure that you draw the most important information from the related valuation lesson
  • Problem solving - use acquired knowledge to fill in the main pieces of formula practice problems
  • Defining key concepts - ensure that you can accurately define main phrases, such as cost approach and entrepreneurial profit

Additional Learning

Review topics covered in the quiz and learn even more with our accompanying lesson Cost Components of Real Estate Valuation. The lesson covers:

  • Methods used to estimate property value
  • Replacement cost
  • Reproduction cost
  • Entrepreneurial profits and incentives
  • Direct and Indirect costs