Property Valuation
An appraiser in New Jersey notes that a comparable property has a superior view compared to the subject. The appraiser should make a:
AUpward adjustment to the comparable
BDownward adjustment to the comparable to account for the superior feature✓ Correct
CNo adjustment, as views are subjective
DUpward adjustment to the subject property
Explanation
When a comparable has a superior feature compared to the subject, the appraiser makes a downward (negative) adjustment to the comparable's sale price. This reduces the comparable's adjusted value to reflect what it would have sold for if it had the same (inferior) view as the subject.
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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.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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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