Property Valuation
A New Mexico appraiser is asked to determine the 'as-completed' value of a property currently under renovation. This is:
AThe current as-is market value
BThe prospective value of the property assuming the planned renovations are completed as of a future date✓ Correct
CThe replacement cost of the improvements
DThe land value only
Explanation
An 'as-completed' or 'prospective' appraisal estimates the market value of a property as of a future date assuming proposed construction or renovations are completed, useful for construction loans.
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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.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
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