Texas Property Tax Consultant Practice Exam

Which approach focuses on the assessment of physical characteristics of a property?

1. Sales comparison approach

2. Income approach

3. Cost approach

4. Depreciation approach

The correct answer is: Sales comparison approach

The accurate choice for identifying an approach that focuses on the assessment of physical characteristics of a property is the cost approach. This method evaluates the value of a property based primarily on the cost to replace or reproduce the structure, minus any depreciation. It involves analyzing the physical aspects, such as size, quality of materials, and construction techniques, as well as location specifics. The cost approach is particularly effective for new constructions or unique properties where comparable sales data might not be readily available. In contrast, the sales comparison approach relies on analyzing sales data of similar properties to determine value, which may not delve deeply into the specific physical characteristics of the property in question. The income approach assesses potential income generation from the property, focusing more on financial performance rather than physical traits, and the depreciation approach is a method of measuring reductions in property value over time, primarily concerned with the condition and aging of assets rather than the characteristics that can be observed at a particular point in time.