A 2,000 sq ft home in a neighborhood has a value of $400 per square foot based on comparable sales. Using the sales comparison approach, what is the indicated value?
Why $800,000 Is Correct
Answer B: $800,000
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.
People Also Study
Related California Questions
- A property generates an NOI of $60,000. Comparable properties sell at a 5% cap rate. What is the indicated value using the income approach?Property Valuation
- When adjusting a comparable sale in the sales comparison approach, an appraiser ADDS value to the comparable when the comparable is:Property Valuation
- An appraiser values a property using the sales comparison approach and finds that a comparable property has a swimming pool worth $15,000 but the subject property does not. What adjustment does the appraiser make?Property Valuation
- When using the sales comparison approach, which of the following properties would typically be selected as a comparable sale?Property Valuation
- An apartment building has 6 units each renting for $1,800/month. The gross rent multiplier (GRM) for comparable buildings is 110. What is the estimated value of the building using the monthly GRM method?Real Estate Math
- A commercial property has an annual NOI of $105,600 and comparable properties are selling at a 7% cap rate. What is the property's value using the income approach?Real Estate Math
- A property's NOI is $54,000 per year. A comparable property recently sold at a 7.5% cap rate. Using the income approach, what is this property's estimated value?Real Estate Math
- A home is depreciated for income tax purposes using straight-line depreciation over 27.5 years. The purchase price was $550,000, with $50,000 allocated to land. What is the annual depreciation deduction?Real Estate Math
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.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property 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.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Math Concepts
Study This Topic
Practice More California Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free California Quiz →