Property Valuation
In the sales comparison approach, an appraiser adjusts the comparable sale price when:
AThe subject property and comparable are identical
BThe comparable has a feature the subject lacks — the appraiser subtracts from the comparable✓ Correct
CThe subject has a feature the comparable lacks — the appraiser subtracts from the comparable
DThe comparable sold more than 6 months ago — the appraiser adds a fixed 5%
Explanation
In the sales comparison approach, adjustments are made to the comparable (not the subject). If the comparable is superior to the subject (e.
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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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