Property Valuation
An appraisal that values property for insurance purposes uses which value concept?
AMarket value
BInsurable value (replacement cost of improvements only, excluding land)✓ Correct
CInvestment value
DAssessed value
Explanation
Insurance appraisals focus on insurable value — the cost to rebuild or replace the improvements (structures) in the event of a total loss, not including land value.
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Key Terms to Know
Appraisal
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
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.
Math Concepts
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