Property Valuation
In Maine, a licensed appraiser discovers a property has significant underground oil tank contamination. The appraiser should:
AIgnore it and appraise as-is
BDisclose and consider the contamination as an adverse factor✓ Correct
CRefuse the assignment
DEstimate cleanup costs and add them to value
Explanation
Appraisers must disclose and consider known adverse environmental factors. The contamination would reduce the property's market value and must be addressed in the appraisal report.
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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.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
State-Specific Concepts
DRE Regulation
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