An appraiser estimates a property at $425,000 using the sales comparison approach and $410,000 using the cost approach. The final reconciled value is $420,000. The sales comparison approach received the most weight. This is appropriate because:
Why The sales comparison approach is most supported by market data for residential properties Is Correct
Answer B: The sales comparison approach is most supported by market data for residential properties
Exam Tip: Real Estate Math
Math questions are formula-based. Memorize the key formulas: commission splits, proration, cap rate (NOI ÷ Value), GRM (Price ÷ Gross Rent), and LTV (Loan ÷ Value). Practice converting between annual and monthly figures.
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Key Terms to Know
Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
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.
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