Property Valuation (alternative)
A Maryland appraiser uses three comparable sales to value a property. After adjustments, the indicated values are $310,000, $315,000, and $320,000. The appraiser's final estimate of value is likely:
A$315,000 as a simple average
BWeighted most toward the comparable requiring the least adjustment✓ Correct
C$310,000 as the most conservative estimate
D$320,000 as the highest comparable
Explanation
In reconciling comparable sales, appraisers give the most weight to the comparable requiring the fewest and smallest adjustments, as it is most similar to the subject property.
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Key Terms to Know
Comparable Sales (Comps)
Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
AppraisalA 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.
Fiduciary DutyThe highest legal duty an agent owes to a principal — requiring the agent to act in the principal's best interest above all others.
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