Property Valuation
Extraordinary and catastrophic events affecting Indiana real estate markets (such as flooding or economic recession) may cause appraisers to:
AIgnore market changes as temporary
BAddress market conditions in the appraisal and potentially use fewer comparables from before the event to reflect current market realities✓ Correct
COnly use sales from before the event
DAvoid appraisals in affected markets
Explanation
When a market event (flood, economic shock) significantly affects property values, appraisers must reflect current market conditions in their analysis, potentially limiting reliance on pre-event comparables and disclosing the market conditions affecting value.
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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.
State-Specific Concepts
DRE Regulation
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