Tennessee Real Estate Exam Practice Question
Which of the following methods uses recent sales as the only factor to arrive at a value estimate?
Correct Answer: B
Rationale: The sales comparison method focuses exclusively on recent sales data of similar properties to determine an estimate of value, making it the most relevant choice.
Option A, cost method, evaluates value based on the cost to reproduce or replace the property, not solely on sales data.
Option C, income method, estimates value based on the income generated by the property, incorporating factors like rental income and expenses.
Option D, capitalization, involves converting income streams into a value estimate using a capitalization rate, again relying on income rather than recent sales. Thus, only the sales comparison method directly utilizes recent sales as its sole factor.
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