Property Valuation
Which appraisal approach is most appropriate for appraising a single-family residence in an active market with many similar sales?
ACost approach
BIncome approach
CSales comparison approach✓ Correct
DGross rent multiplier approach
Explanation
The sales comparison approach is generally the most reliable method for appraising single-family residences in active markets where comparable sales are available.
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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.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Math Concepts
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