Property Valuation
In a declining market, a Minnesota appraiser using the sales comparison approach should:
AIgnore the market trend and use the highest comparable sales
BApply a time/market condition adjustment to reflect the declining market conditions✓ Correct
CUse only sales from outside the declining market
DValue the property above current market conditions to protect the seller
Explanation
When market conditions are declining, appraisers must apply time adjustments (market condition adjustments) to comparable sales to reflect current market levels. Using unadjusted sales from a higher market period would overstate value.
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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.
Fiduciary DutyThe highest legal duty an agent owes to a principal — requiring the agent to act in the principal's best interest above all others.
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