Property Valuation
An appraiser in Louisiana determines a residential comparable sale has 200 more square feet of living area than the subject. If the appraiser uses $50 per square foot for size adjustments, the adjustment to the comparable is:
A+$10,000 to the comparable
B−$10,000 to the comparable✓ Correct
C+$10,000 to the subject value
DNo adjustment because size differences are minor
Explanation
The comparable is larger than the subject — a superior feature. A downward adjustment (−$10,000) is applied to the comparable's price.
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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.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Math Concepts
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