When an appraiser makes a 'location adjustment' to a comparable sale, they are accounting for:
Why B. Differences in the desirability of the location between the comparable's neighborhood and the subject's neighborhood that affect value Is Correct
Answer B: B. Differences in the desirability of the location between the comparable's neighborhood and the subject's neighborhood that affect value
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.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
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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