Arizona Real Estate License Practice Exam

Determining property value is traditionally accomplished through three primary methods: the cost approach, the sales comparison approach, and the income approach.

The cost approach estimates value based on the cost to replace or reproduce the property, minus depreciation, while the sales comparison approach evaluates value by comparing similar properties that have recently sold. The income approach, on the other hand, assesses the value based on the income generated from the property, making it particularly relevant for investment properties.

Market condition adjustment is not recognized as a standard method for determining property value. Rather, it is a consideration that may influence how the aforementioned methods are applied, often relating to economic trends or shifts in supply and demand in the real estate market. While market conditions can impact property valuations, they are not a standalone method of evaluation like the others.