Property Valuation
The sales comparison approach to value is most commonly used for:
AIncome-producing commercial properties
BNew construction properties only
CSingle-family residential properties✓ Correct
DSpecial-use properties such as churches and schools
Explanation
The sales comparison approach (market data approach) is most commonly used to appraise single-family residential properties because there is generally sufficient comparable sales data available.
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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.
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