Tennessee Real Estate License Exam Practice Question
Which of the following methods for establishing value is generally considered most useful for a special-purpose building such as a church?
Correct Answer: A
Rationale: Cost method is most useful for special-purpose buildings like churches because it focuses on the expenses incurred to construct or replace the structure, which is essential when comparable sales or income generation are minimal. Special-purpose buildings often lack a robust market, making the income capitalization method less applicable, as these properties may not generate significant revenue. Market data and sales comparison methods also fall short, as they rely on comparable properties that may not exist for unique buildings like churches, limiting their effectiveness in valuation.
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