Property Valuation
When a Mississippi appraiser notes that a property is in an 'arm's-length transaction,' they mean:
AThe buyer and seller are related to each other
BThe buyer and seller are independent parties acting in their own best interests without duress or unusual conditions✓ Correct
CThe property sold at below-market value
DThe transaction was completed without a real estate agent
Explanation
An arm's-length transaction is one between unrelated, independent parties acting in their own self-interest without compulsion. Arm's-length transactions are most useful as comparables because they reflect true market conditions.
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Key Terms to Know
Adjustable-Rate Mortgage (ARM)
A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
AppraisalA 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.
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