Property Valuation (alternative)
In Maryland, the difference between market value and investment value is that:
AThey are identical concepts
BMarket value is based on typical buyer behavior in the open market; investment value is the value to a specific investor based on their requirements and financing✓ Correct
CInvestment value is always higher
DMarket value is only used for residential properties
Explanation
Market value reflects what a hypothetical typical buyer would pay in the open market. Investment value is specific to one investor, reflecting their tax situation, financing, and return requirements.
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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.
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.
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