Property Valuation
Which of the following is NOT a step in the sales comparison approach used by Missouri appraisers?
ASelect comparable sales
BMake adjustments for differences
CCalculate net operating income✓ Correct
DReconcile adjusted values
Explanation
Calculating net operating income is part of the income capitalization approach, not the sales comparison approach. The sales comparison approach involves selecting comps, making adjustments, and reconciling values.
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Key Terms to Know
Capitalization Rate (Cap Rate)
A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Math Concepts
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