Property Valuation
A Missouri appraiser concludes a value of $285,000. They note that the sales comparison approach was given the most weight because:
AThe income approach was not applicable to this single-family home
BThe sales comparison approach is most reliable for owner-occupied residential properties✓ Correct
CMREC requires it
DThe cost approach showed a higher value
Explanation
For owner-occupied residential properties, the sales comparison approach is most reliable because it reflects actual buyer behavior in the market. It is typically given the most weight by appraisers.
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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.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
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