Property Valuation
When comparing two properties in the same Manchester, NH neighborhood, an appraiser adjusts for the fact that one sold 18 months ago while the other sold last month. This is called a:
ALocation adjustment
BMarket conditions (time) adjustment✓ Correct
CPhysical characteristics adjustment
DFinancing conditions adjustment
Explanation
A market conditions adjustment (also called a time adjustment) accounts for changes in market values between the date of the comparable sale and the effective date of the appraisal. In a rising market, older sales would be adjusted upward; in a declining market, downward.
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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.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
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