Property Valuation (alternative)
An adjustment for a superior feature in a comparable sale when using the sales comparison approach means the appraiser will:
AAdd to the comparable's sale price
BSubtract from the comparable's sale price✓ Correct
CIgnore the difference if it's under $5,000
DAutomatically reject the comparable
Explanation
When a comparable has a feature superior to the subject, the appraiser subtracts the value of that difference from the comparable's price to bring it to equality with the subject.
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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.
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