Property Valuation
An Iowa appraiser is reconciling the three approaches to value. She assigns greatest weight to the sales comparison approach. This is appropriate when:
AThe property is a new office building
BThe property is a single-family residence with good comparable sales data✓ Correct
CThe property is a special-use facility such as a church
DThe property generates significant rental income
Explanation
The sales comparison approach receives greatest weight when there are good comparable sales data, which is typically the case for single-family residential properties in active Iowa markets.
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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.
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