Which of the following is a common approach alongside the cost approach in property valuation?

The income approach is a common method used in conjunction with the cost approach in property valuation, particularly for investment or commercial properties. This approach is based on the principle that property value is determined by its ability to generate income. By evaluating the potential revenue stream a property can produce, appraisers can derive a value that reflects both current income and future cash flows.

In contrast, the cost approach assesses value based on the cost to replace or reproduce the property, minus any depreciation. The income approach complements this by incorporating an analysis of the economics of ownership, thereby providing a more comprehensive view of a property’s worth. This dual methodology is particularly useful when appraising properties that are income-producing assets, as it gives insight into both market value and the potential return on investment.

Other options, while relevant in various contexts, do not serve as a primary complementary method to the cost approach. The comparative sales approach focuses on analyzing market sales to determine value and may not be as applicable in cases where income potential is crucial. Physical depreciation analysis deals specifically with the deterioration of property and is part of the cost approach but does not serve as a standalone approach. Immediate market adjustment is an informal term and not a commonly recognized method in professional property valuation.