Property Valuation
The 'band of investment' method in Mississippi appraisal is used to:
ACalculate the GRM
BDerive a composite capitalization rate based on the weighted returns required by equity and debt investors✓ Correct
CEstimate the cost of construction
DCalculate depreciation using the age-life method
Explanation
The band of investment method derives an overall capitalization rate by weighting the mortgage interest rate and the equity capitalization rate proportionally to the financing structure (mortgage-to-value ratio), creating a blended rate reflecting both debt and equity requirements.
Related Mississippi Property Valuation Questions
- When a Mississippi appraiser notes that the subject property's neighborhood is 'stable,' this means:
- A Mississippi appraiser uses the 'age-life method' to estimate depreciation. If a building has an economic life of 50 years and an effective age of 10 years, the depreciation percentage is:
- A Mississippi appraiser identifies a comparable sale that was a 'distressed sale' (foreclosure or short sale). This comparable requires:
- External obsolescence (economic obsolescence) in appraisal refers to loss in value caused by:
- Which type of depreciation affects a Mississippi Gulf Coast condo's value due to increased insurance costs and storm risk following a hurricane season?
- In the sales comparison approach, an adjustment is made to the comparable sale, not to the subject property. If a comparable sold for $200,000 and has a pool worth $15,000 that the subject lacks, the appraiser:
- A Mississippi property suffers from 'economic obsolescence' caused by a new industrial facility built nearby that creates noise and odor. This type of obsolescence is:
- In the cost approach to appraisal, effective age refers to:
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