Property Valuation
What is 'market conditions adjustment' in a real estate appraisal?
AAn adjustment for the appraiser's market knowledge and expertise
BAn adjustment to comparable sales prices to account for changes in market conditions (appreciation or depreciation) between the comparable's sale date and the appraisal's effective date✓ Correct
CAn adjustment for differences in the economic conditions of different neighborhoods
DA required adjustment when comparable sales occurred more than 6 months ago
Explanation
A time adjustment (market conditions adjustment) accounts for price changes between when a comparable sold and the appraisal's effective date. In an appreciating market, older comps are adjusted upward; in a declining market, downward.
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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.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
Math Concepts
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