Property Valuation
In Arizona, the 'sales comparison approach' to value requires the appraiser to make adjustments for differences between the subject and comparables. The rule is: if the comparable is INFERIOR, the adjustment is:
ANegative (subtract from comparable)
BPositive (add to comparable)✓ Correct
CZero—inferior comparables are not used
DPositive to the subject property's value
Explanation
The golden rule of adjustments: if the comparable has an inferior feature compared to the subject, make a positive (upward) adjustment to the comparable to account for what the comparable would have sold for if it had the superior feature.
People Also Study
Related Arizona Questions
- In the sales comparison approach, an appraiser makes 'adjustments' to comparable sales. If a comparable sale has a pool and the subject property does NOT, the appraiser would:Property Valuation
- An appraiser makes a positive adjustment of $5,000 to a comparable sale in the sales comparison approach. This means:Property Valuation
- In the sales comparison approach, if a comparable property sold for $320,000 and has a pool worth $15,000 that the subject property lacks, the appraiser should:Property Valuation
- An Arizona appraiser is valuing a historic adobe home. There are very few comparable sales and it generates no rental income. Which appraisal approach would MOST likely be given the most weight?Property Valuation
- An Arizona rental property generates $2,400 per month in rent. The gross rent multiplier (GRM) for comparable properties is 135. What is the estimated value?Real Estate Math
- The Dodd-Frank Act's Ability-to-Repay (ATR) rule requires Arizona lenders to:Finance
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.
Study This Topic
Practice More Arizona Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Arizona Quiz →