Property Valuation
The sales comparison approach to value is MOST appropriate for:
ASpecial-purpose properties like churches
BIncome-producing commercial properties
CResidential properties with ample comparable sales✓ Correct
DNew construction projects
Explanation
The sales comparison approach is most reliable for residential properties where there are sufficient recent comparable sales in the marketplace.
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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.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
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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