Property Valuation
An appraiser applies a 'paired sales analysis' to estimate the value contribution of a garage in a New Mexico market. This technique:
ACompares the subject to a national database
BCompares sales of similar properties that differ only in the feature being measured to isolate its value contribution✓ Correct
CUses a standard deduction table for all features
DApplies the cost to build the garage
Explanation
Paired sales analysis isolates the value of a specific feature by comparing matched pairs of properties that are otherwise similar but differ only in that feature, allowing the appraiser to quantify the market value of the feature.
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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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