Property Valuation
What is a 'limiting condition' in an appraisal report and give a Nevada example?
AA condition limiting the number of comparable sales used
BA statement in the appraisal report identifying assumptions or conditions under which the appraisal was performed that may limit its reliability — for example, assuming no undisclosed environmental conditions on a Las Vegas commercial site✓ Correct
CA zoning restriction limiting the property's use
DA lender-imposed limit on the maximum appraised value
Explanation
Limiting conditions in USPAP-compliant appraisals inform the reader of the circumstances affecting the report's reliability. Standard limiting conditions include: the appraiser assumes title is good, no survey was performed, information provided by others is assumed accurate, and no undisclosed conditions exist.
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Key Terms to Know
Appraisal
A 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.
ZoningLocal government regulations that control land use by dividing areas into zones specifying permitted uses, building sizes, and densities.
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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