Real Estate Math
An Illinois property was purchased for $185,000. Five years later, property values have increased 25% in the area. What is the estimated current market value?
A$46,250
B$231,250✓ Correct
C$231,000
D$225,000
Explanation
Estimated value = Purchase price × (1 + appreciation rate) = $185,000 × 1.25 = $231,250.
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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.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Math Concepts
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