Property Valuation
A Connecticut appraiser valuing a historic property finds no directly comparable sales of historic properties. The appraiser may use:
AOnly the cost approach for historic properties
BComparable sales from similar non-historic properties, with adjustments for the historic designation's impact (positive or negative) on value✓ Correct
CThe seller's opinion of value
DOnly properties within the same historic district
Explanation
When direct comparables are unavailable, appraisers use the best available comparables and apply adjustments for differences. For a historic property, the appraiser would adjust non-historic comparables for the impact of the historic designation on value—which can be positive (prestige, tax credits) or negative (renovation restrictions).
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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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