Property Valuation
A Louisiana appraiser is asked to determine the value of a proposed development project. This type of appraisal is called a:
ARetrospective appraisal
BProspective appraisal (value upon completion)✓ Correct
CAs-is appraisal
DAssessed value determination
Explanation
A prospective appraisal estimates the value of a property as of a future date — typically upon completion of proposed construction or improvements. Lenders often require this for construction loans.
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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.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
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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