Property Valuation
What is value in exchange versus investment value in Nevada appraisal?
AThey are the same concept in Nevada appraisal
BValue in exchange (market value) is what a property would sell for in an open market; investment value is the value to a specific investor based on their requirements and expectations✓ Correct
CInvestment value is always lower than market value
DValue in exchange only applies to commercial properties
Explanation
Market value (value in exchange) reflects what the property would sell for in an arm's-length, open-market transaction. Investment value reflects a specific investor's criteria — their required rate of return, tax situation, or portfolio needs.
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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.
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.
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.
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