Valuation and Financing Practice Question
Question
A salesperson is explaining a concept to a client involving income approach. What should a California real estate licensee understand? (Item 145)
Answer choices
- A. Use income capitalization concepts for income-producing property.
- B. It allows a salesperson to act independently of the responsible broker.
- C. It shifts all responsibility to escrow and eliminates the broker’s duties.
- D. It makes oral promises enforceable in every real estate transaction.
Correct Answer
A. Use income capitalization concepts for income-producing property.
Explanation
The correct answer is A because income approach requires candidates to use income capitalization concepts for income-producing property. The other options overstate the effect of custom, oral agreement, escrow, or independent salesperson action and do not reflect safe California exam practice.
Question details
- Difficulty: medium
- Domain: Valuation and Financing
- Objective: income approach