Property Valuation
A 'drive-by' appraisal (exterior-only inspection) is:
AProhibited by USPAP
BA restricted type of appraisal where the appraiser only inspects the exterior✓ Correct
CThe most comprehensive form of appraisal
DUsed only for commercial properties
Explanation
A drive-by appraisal involves an exterior-only inspection. It is less comprehensive than a full interior appraisal and requires limiting conditions and assumptions about the interior's condition.
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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.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
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