Property Valuation
In Minnesota, the 'net adjustments' in the sales comparison approach should generally be:
AAs large as possible to account for all differences
BMinimized by selecting comparables that are as similar to the subject as possible✓ Correct
CSet at exactly 10% of the sale price per feature
DApplied only to properties sold more than 6 months ago
Explanation
Appraisers minimize adjustments by selecting the most similar comparables available. Excessive adjustments reduce the reliability of the comparable because the appraiser is making too many guesses about value differences.
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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.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
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