Property ValuationIntermediateDelaware Exam

What is 'overimprovement' in Delaware real estate appraisal?

AImprovements that exceed safety code requirements
BImprovements that exceed the market norm for the neighborhood, resulting in the cost of improvements not being fully recovered in market valueCorrect
CMultiple improvements made to the same property over a short period
DImprovements that technically over-qualify the property for certain loan programs

Why Improvements that exceed the market norm for the neighborhood, resulting in the cost of improvements not being fully recovered in market value Is Correct

Answer B: Improvements that exceed the market norm for the neighborhood, resulting in the cost of improvements not being fully recovered in market value

An overimprovement is a property improvement that exceeds what the market supports for that neighborhood. The cost of the improvement is not fully recovered in market value — the principle of regression and contribution confirms that the property is worth less than the cost to improve it to that level.

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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