property valuation

[Kelly Z]

the value of a property using the sales comparison and income approaches
I came across a question asking the value of a proerty use income approach. And the answer is calculated by the linear relationship with a comparable sales.
I thought income approach is to use income divided by proper discount rate.
Can someone explain the difference between the two methods?
Thanks.

 

[S2000magician]

You’re correct: the income approach uses the projected income divided by a capitalization rate. The comparable sales approach is quite different.

 

[Gurifissu]

S2000magician wrote:
You’re correct: the income approach uses the projected income divided by a capitalization rate. The comparable sales approach is quite different.

Using the income approach, isn’t it that the cap rate is equal to the projected income divided by the market value of the property?

 

[Kelly Z]

So the solution is wrong?

 

[S2000magician]

Yes: the solution (as you stated it) is wrong.

 

[Kelly Z]

Thanks.

 

[S2000magician]

My pleasure.