Property Valuation
An Arizona residential appraiser uses the sales comparison approach and finds the subject property has a pool that no comparable sale has. The appraiser should:
AIgnore the pool since it is common in Arizona
BAdd the estimated contributory value of the pool to each comparable's sale price✓ Correct
CSubtract the pool value from the subject's estimated value
DAssign the property an automatic $50,000 premium
Explanation
When the subject has a feature the comparable lacks (pool), the appraiser adds the estimated contributory value of that feature to each comparable's sale price 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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