Property Valuation
In Hawaii, when an appraiser adjusts comparable sale prices, which property does the appraiser adjust—the subject or the comparable?
AA. The subject property
BB. The comparable sale's price is adjusted to reflect what it would have sold for if it were like the subject✓ Correct
CC. Both are adjusted equally
DD. Neither is adjusted; only the indicated values are averaged
Explanation
In the sales comparison approach, the comparable's sale price is adjusted. If the comparable is inferior to the subject, a positive adjustment is made to the comparable's price.
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Key Terms to Know
Comparable Sales (Comps)
Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
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.
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