Property Valuation
In the sales comparison approach, appraisers make adjustments to comparable sales to account for:
AThe subject property's assessed value
BDifferences between the comparable and the subject property✓ Correct
CThe buyer's financing terms only
DCurrent market index rates
Explanation
In the sales comparison approach, appraisers adjust comparable sales prices upward or downward to reflect differences between each comparable and the subject property — such as size, condition, features, and location.
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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.
Math Concepts
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