Humber/Ontario Real Estate Course 2 Exam Practice

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What valuation method BEST determines the value of a unique property with few comparable sales?

  1. Income Approach

  2. Sales Comparison Approach

  3. Market Data Approach

  4. Cost Approach

  5. Gross Rent Multiplier

  6. Cap Rate Analysis

The correct answer is: Cost Approach

The Cost Approach is the best valuation method for determining the value of a unique property with few comparable sales because it evaluates the cost of replacing the property with a similar one. This approach is especially useful when there are limited comparable sales data available, as it provides an estimate of how much it would cost to reproduce the property at current prices. The Income Approach, Sales Comparison Approach, Market Data Approach, Gross Rent Multiplier, and Cap Rate Analysis all rely heavily on the availability of comparable sales data and income information from similar properties, which may not be reliable for a unique property.

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