Property Valuation
If a subject property has 3 full bathrooms and a comparable has 2 full bathrooms, and each bathroom is worth $8,000, how should the appraiser adjust?
AAdd $8,000 to the comparable's sale price✓ Correct
BSubtract $8,000 from the comparable's sale price
CAdd $8,000 to the subject's estimated value
DNo adjustment is needed for bathrooms
Explanation
The subject is superior to the comparable (has more bathrooms). To make the comparable equivalent to the subject, add $8,000 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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