Property Valuation
In a declining market, a time adjustment to comparable sales would generally be:
APositive (upward)
BNegative (downward)✓ Correct
CNo adjustment needed
DApplied only to the subject property
Explanation
In a declining market, prices have fallen since earlier sales, so comparables from earlier periods need a negative (downward) time adjustment to reflect current lower market conditions.
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- A comparable sale that sold 18 months ago may require a time (market conditions) adjustment because:Property Valuation
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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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