Property Valuation
Which principle of value states that the value added by any component of a property should be measured by what it contributes to the whole?
AAnticipation
BSubstitution
CContribution✓ Correct
DBalance
Explanation
The principle of contribution holds that the value of any component (e.g.
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Key Terms to Know
Short Sale
A sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
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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