36. Which of the following approaches would allow one to estimate value if the construction price per square foot is known?
Answer: A
Cost Approach allows estimation of value when construction price per square foot is known.
The Cost Approach is effective for estimating property value by calculating the cost of construction per square foot, which provides a clear basis for determining the overall value of the property.
A) Cost.
This option is correct because the Cost Approach involves estimating the value of a property based on the cost to replace or reproduce it, factoring in the construction price per square foot. By knowing this cost, one can effectively assess the total value of the property based on its size and construction quality.
B) Income.
The Income Approach is not applicable in this context because it estimates value based on the income generated by a property, rather than the costs associated with its construction. Without rental or income data, this method cannot utilize the construction price per square foot.
C) Market comparison.
The Market Comparison Approach relies on comparing the property to similar properties in the market, using sales data to determine value. While it is a valid method, it does not directly utilize the construction price per square foot, making it less relevant for this specific question.
D) Sales.
The Sales Approach, similar to the Market Comparison, focuses on the sale prices of comparable properties to estimate value. It does not incorporate the construction price per square foot, thus failing to address the requirement of the question.
Conclusion
The Cost Approach is the only method that directly leverages the construction price per square foot to estimate property value, making it the definitive correct choice. Other options, including Income, Market Comparison, and Sales approaches, do not utilize construction costs and therefore cannot fulfill the requirement stated in the question.