Property Valuation
A Minnesota appraiser is asked to value a property 'as improved' versus 'as if vacant.' The 'as improved' value is typically:
AAlways lower than the as-vacant value
BHigher than as-vacant if the improvements add value✓ Correct
CThe same as the assessed value
DOnly used for commercial properties
Explanation
The 'as improved' value includes the value of existing structures on the land. If the improvements add value (a functional, modern home), the as-improved value will exceed the as-vacant (land-only) value.
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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.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
Math Concepts
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