Property Valuation
In a sales comparison appraisal, the phrase 'adjusting to the subject' means:
AThe appraiser changes the subject's features to match comparables
BThe appraiser adds or subtracts from the comparable's sale price to account for differences from the subject✓ Correct
CThe subject's value is set equal to the lowest comparable sale
DThe subject's listing price is used instead of comparables
Explanation
In the sales comparison approach, adjustments are always made to the comparable sales — not to the subject property. If the comparable is inferior in some feature to the subject, a positive adjustment is added to the comparable's price.
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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.
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.
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