Which approach to appraisal focuses primarily on the income generated by a property?

The income approach to appraisal is a method that emphasizes the revenue-producing potential of a property. This approach is particularly pertinent for investment properties such as multifamily units, office buildings, and commercial real estate, where the primary concern is often the income that the property generates.

In applying the income approach, appraisers calculate the net operating income (NOI) and apply a capitalization rate to estimate the value of the property. This method stands out because it takes into consideration the financial return that an investor can expect to receive from the property, making it essential for assessing investment value.

Other approaches, such as the cost approach, focus on the cost to replace or reproduce a property, while the comparable sales approach looks at recent sales of similar properties to determine value. The market value approach is a broader term and can encompass different methods, including the income approach, but does not specifically highlight future income generation as its primary focus. Therefore, the income approach is the most relevant for understanding how much income a property can produce, making it the correct answer.