Property Valuation
An adjustment of +$10,000 is made to a comparable because the comparable has one fewer bathroom than the subject. This means the appraiser believes the extra bathroom contributes approximately $10,000 in value. This type of analysis is:
AMarket-based adjustment using paired sales or market evidence✓ Correct
BAn arbitrary adjustment not permitted under USPAP
CA cost adjustment based on replacement cost only
DA mandatory adjustment required by Fannie Mae
Explanation
Adjustments should be market-based — derived from paired sales analysis or other market evidence showing how much the market pays for the feature, not based on cost alone.
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Key Terms to Know
Comparable Sales (Comps)
Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
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