Property Valuation
A NH appraiser who values a Laconia waterfront property notes that it commands a significant premium over non-waterfront properties. This premium reflects:
AExternal obsolescence
BThe contribution of water frontage to value — a market-driven feature premium✓ Correct
CFunctional obsolescence in inland properties
DThe cost of building a dock
Explanation
Water frontage commands a significant market premium in NH's Lakes Region — reflecting the value buyers assign to lake access, views, and recreational opportunities. This premium is measured through paired sales analysis.
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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.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
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.
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