Property Valuation
An appraiser's final estimate of value represents a reconciliation of the three approaches. Reconciliation means the appraiser:
AAverages the three value estimates equally
BWeighs each approach based on data quality and relevance to the property type✓ Correct
CUses the highest value among the three approaches
DDiscards approaches that differ significantly from each other
Explanation
Reconciliation is not simple averaging. The appraiser considers the reliability of data, the appropriateness of each approach for the property type, and the quality of the analysis, then gives more weight to the approach(es) most applicable to the property.
People Also Study
Related Kentucky Questions
- An appraiser in Louisville uses three comparable sales. After adjustments, the values are $285,000, $290,000, and $287,500. The appraiser assigns the most weight to the $290,000 comparable because it is most similar. The indicated value is:Property Valuation
- The income approach to value is most appropriate for which type of Kentucky property?Property Valuation
- The income approach uses a gross rent multiplier (GRM) to estimate value. A property has monthly rent of $1,500 and comparable GRM is 120. The estimated value is:Property Valuation
- A Kentucky property appraiser uses the cost approach. The land value is $40,000 and the building replacement cost is $220,000. Physical depreciation is 15%. What is the indicated value?Real Estate Math
- An appraiser using the income approach determines that a Kentucky property's net operating income is $30,000. At a 7.5% cap rate, the estimated value is:Property Valuation
- A Kentucky investment property has a gross rent of $60,000/year. The appraiser uses a GIM of 8 to estimate value. What is the estimated value?Real Estate Math
Key Terms to Know
Appraisal
A 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.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Study This Topic
Practice More Kentucky Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Kentucky Quiz →