Property Valuation
When appraising residential property in Florida, the sales comparison approach requires the appraiser to make adjustments for differences between the subject property and comparables. These adjustments are made to:
AThe subject property's value
BThe comparable sale price✓ Correct
CThe average of all comparable prices
DThe appraiser's initial opinion of value
Explanation
In the sales comparison approach, adjustments are always made to the comparable sale price — never to the subject property. If a comparable is superior to the subject in some feature, a negative adjustment is made to the comparable's price.
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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.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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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