Property Valuation
In Hawaii, a property's 'market value' is best defined as:
AThe price the seller wants to receive
BThe assessed value used for tax purposes
CThe most probable price a property would sell for in an open and competitive market under normal conditions✓ Correct
DThe replacement cost of the improvements
Explanation
Market value is the most probable price a property would bring in an arm's-length, open-market transaction with both buyer and seller acting prudently and knowledgeably.
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Key Terms to Know
Depreciation
A reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
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.
Math Concepts
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