Alabama Real Estate Practice Exam

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Master your Alabama real estate exam with our comprehensive practice test. Tailored feedback, expert tips, and up-to-date questions to ensure your success!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

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What is the primary use of the income approach in property appraisal?

Evaluating residential homes
Determining the value of investment properties
Estimating the cost of new construction
Calculating property taxes

The correct answer is: Determining the value of investment properties

The income approach is a method used to determine the value of investment properties, such as commercial buildings or rental properties. This approach takes into account the potential income that can be generated by the property, and uses this information to determine its value. Option A is incorrect because residential homes are typically evaluated using the market comparison approach. Option C is incorrect because this approach is used to estimate the cost of constructing a new building, not to determine the value of an existing property. Option D is incorrect because property taxes are calculated using the assessed value of a property, which is typically based on the market comparison approach.