Property Valuation
An appraiser makes a paired sales analysis to determine the market value contribution of a garage. This technique:
AAverages the sale prices of all homes with garages
BCompares sales of otherwise similar homes — one with a garage and one without — to isolate the value of the garage✓ Correct
CEstimates the construction cost of a garage
DAnalyzes the rental premium for units with garages
Explanation
Paired sales analysis (matched pairs) is an appraisal technique that compares two otherwise identical properties that differ in only one characteristic to isolate the market value contribution of that feature.
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- When appraising a property in Newark, NJ, an appraiser making a paired sales analysis would use that technique to:Property Valuation
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- In a NJ appraisal, 'market value' is most accurately defined as:Property Valuation
- A NJ appraiser who discovers during their analysis that two 'comparable' sales were not arm's-length transactions (e.g., foreclosure sales, estate sales at distressed prices) should:Property Valuation
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.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
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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