Property Valuation
When a Colorado appraiser makes a 'downward adjustment' to a comparable, it means:
AThe comparable is inferior to the subject in that feature
BThe comparable is superior to the subject in that feature, so its sale price is reduced to reflect the subject's lower value✓ Correct
CThe subject's value is being decreased
DThe appraiser is reducing the final value opinion
Explanation
A downward adjustment to a comparable means the comparable is SUPERIOR to the subject in that feature. The comparable's sale price is adjusted downward to reflect what it would have sold for if it lacked that superior feature, making it comparable to 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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