Alabama Real Estate Practice Exam

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Prepare for the Alabama Real Estate Exam. Utilize flashcards and multiple-choice questions, each coupled with hints and explanations. Ace your upcoming test!

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!

Practice this question and more.

What is the first step in determining the market value of a property?

Assessing its environmental factors
Determining its highest and best use
Calculating its development costs
Understanding its economic factors

The correct answer is: Determining its highest and best use

Determining the highest and best use of a property is the first step in determining its market value. This involves considering the possible uses of the property and selecting the most profitable or feasible option. Option A is incorrect because environmental factors, while important, are not the first step in determining market value. Option C is incorrect because development costs are considered after determining the highest and best use. Option D is incorrect because economic factors are also considered after determining the highest and best use. By first determining the highest and best use, the appraiser can accurately assess the market value of the property.