Property Valuation (alternative)
When comparing sales in the same Maryland neighborhood, an appraiser should give the most weight to comparables that are:
AThe most recent and most similar to the subject✓ Correct
BThe highest in sale price
CThe nearest to the subject geographically
DThe most recently listed, not necessarily sold
Explanation
The best comparables are recent, similar in physical characteristics and location, and arm's-length sales. Recent sales from the same neighborhood that closely match the subject property are most reliable.
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- In the sales comparison approach, an appraiser makes adjustments to comparables for differences. If a comparable has a feature the subject does NOT have, the adjustment to the comparable is:Property Valuation
- An appraiser finds that comparable sales in a Maryland neighborhood show a consistent upward trend of 0.5% per month. A sale from 4 months ago should receive a time adjustment of approximately:Property Valuation
- An appraiser using the cost approach for a new Maryland home that is exactly like the subject just built next door would likely give:Property Valuation (alternative)
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Key Terms to Know
Adjustable-Rate Mortgage (ARM)
A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
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.
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