Property Valuation
In Delaware, what is 'change' as a principle of value in real estate appraisal?
AThe principle that market prices change slowly over time
BThe principle that real property and real estate markets are constantly changing, and appraisers must account for the dynamic nature of value✓ Correct
CThe principle that property values change primarily due to inflation
DThe principle that the market value at the time of sale determines fair value
Explanation
The principle of change recognizes that real property and its environment are in constant flux. Economic, social, physical, and governmental forces continuously affect property values, which is why appraisals reflect value as of a specific effective date.
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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.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
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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