Property Valuation
In an appraisal, an adjustment for a comparable sale that is SUPERIOR to the subject property results in:
AAn upward adjustment to the comparable's price
BA downward adjustment to the comparable's price✓ Correct
CNo adjustment needed
DAn upward adjustment to the subject's value
Explanation
If a comparable is superior to the subject in some way, the appraiser makes a downward (negative) adjustment to the comparable's sale price. The goal is to adjust the comp to equal 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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