Title: Differentiate among cost approach to value, income approach to value, and direct sales approach to value.
Course: Real Estate (12154) > Section: Appraising Residential and Income-Producing Property

Differentiation should include

- definitions
  - cost approach to value
  - income approach to value
  - direct sales approach to value

- the principle of substitution and how it is used in the cost approach to value
- the difference between replacement and reproduction costs
- determination of value in the income approach to value
- how and when each approach to value is used.

DPOR correlations: 18VAC135-20-400. 1 (Economy and social impact of real estate); 18VAC135-20-400. 2 (Real estate market and analysis); 18VAC135-20-400. 20 (Appraisal of residential and income-producing property)

Teacher resource: Modern Real Estate Practice, 19th ed., pages 303-309

Process/Skill Questions:

- How is the principle of substitution used in the cost approach to value method?
- What is the difference between replacement and reproduction costs?
- How would an appraiser estimate the value of income-producing properties?
- What are the four basic steps involved in calculating the cost approach to value?
- When is it appropriate to use the cost approach to value?