Property Valuation
In Michigan, 'overimprovement' of a property occurs when:
AThe property is larger than neighboring properties
BThe cost of an improvement exceeds the value it adds, resulting in a net loss relative to neighboring properties✓ Correct
CThe property has too many amenities for the market
DThe property's improvements are newer than those of comparable properties
Explanation
Overimprovement (super-adequacy) occurs when improvements exceed what the market supports, contributing less value than their cost. For example, a $100,000 pool in a neighborhood of $150,000 homes may add only $20,000 in market value—an overimprovement.
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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.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
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.
Math Concepts
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