A Colorado buyer pays $375,000 for a home where comparable sales support a value of $350,000. The $25,000 overpayment is likely due to:
Why Special purchaser value — personal reasons making the property worth more to this specific buyer Is Correct
Answer B: Special purchaser value — personal reasons making the property worth more to this specific buyer
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.
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.
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