Property Valuation
A Florida appraisal of a single-family home using the sales comparison approach results in three adjusted comparable values: $285,000, $292,000, and $280,000. The appraiser's final value opinion should be:
AThe mathematical average: $285,667
BThe median value: $285,000
CBased on the appraiser's professional judgment considering the reliability and number of adjustments in each comparable✓ Correct
DThe highest comparable to protect the lender's interests
Explanation
Reconciliation is NOT a mathematical process. The appraiser must exercise professional judgment to weight each comparable based on its similarity to the subject, the number and magnitude of adjustments required, the reliability of the data, and proximity in time and location.
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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.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
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