Property Valuation
An appraiser notes a comparable that is superior to the subject in one key feature. The appraiser should:
AIgnore the comparable
BMake a negative adjustment to the comparable's sale price✓ Correct
CMake a positive adjustment to the comparable's sale price
DAdd the comparable's feature value to the subject's estimated value
Explanation
When a comparable is superior to the subject property in a feature, a negative (downward) adjustment is made to the comparable to make it equivalent to the subject.
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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.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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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