Property Valuation
A capitalization rate derived from market transactions is called a(n):
AOverall rate (OAR) derived from comparable sales✓ Correct
BBand of investment rate
CDiscount rate
DMortgage constant
Explanation
The overall capitalization rate (OAR) extracted from actual comparable sales (sales comparison-derived cap rate) is considered the most reliable direct capitalization rate because it reflects what actual market participants paid for similar income properties.
Related Arkansas Property Valuation Questions
- A property has an NOI of $36,000 and a cap rate of 8%. What is its estimated value?
- Which of the following most accurately describes 'market rent'?
- If a home in a neighborhood of $200,000 houses is improved with a $100,000 addition, its value will likely:
- The principle of conformity holds that:
- The income approach to value is based on the principle that a property's value is related to:
- Price differs from value in real estate because price is:
- In mass appraisal (as used for property tax assessment), the assessor typically uses:
- The capitalization rate (cap rate) in the income approach is used to:
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