Property ValuationIntermediateDelaware Exam

What is a 'retroactive appraisal' or 'retrospective appraisal' in Delaware?

AAn appraisal conducted before a property is improved

BAn appraisal with an effective date in the past, used for estate settlement, litigation, or tax purposesCorrect

CAn appraisal that is updated retroactively after new data becomes available

DAn appraisal of a property that was demolished

Why An appraisal with an effective date in the past, used for estate settlement, litigation, or tax purposes Is Correct

Answer B: An appraisal with an effective date in the past, used for estate settlement, litigation, or tax purposes

A retrospective (retroactive) appraisal has an effective date in the past, which may be required for estate tax purposes, divorce proceedings, or litigation involving past property values. The appraiser uses data that was available as of that past effective date.

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.

Key Property Valuation Terms in This Question

Appraisal

A professional estimate of a property's market value prepared by a licensed or certified appraiser.

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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.

Deed of Trust

A security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.

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.