In Arizona, a property appraiser finds that the subject property has a 3-car garage while all comparables have 2-car garages. If the market shows a 2-car garage adds $8,000 in value over a 1-car, the appraiser would make:
Why A $8,000 upward adjustment to the comparables Is Correct
Answer A: A $8,000 upward adjustment to the comparables
Exam Tip: Property Valuation
Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.
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Key Terms to Know
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.
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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