Property Valuation
In appraising a historic Santa Fe adobe home, the appraiser notes that finding true comparables is difficult. This is most likely because:
AAdobe homes have no market value
BUnique properties have limited comparable sales, making the sales comparison approach challenging✓ Correct
CThe NMREC prohibits appraisals of historic properties
DAdobe construction cannot be insured
Explanation
Unique properties like historic adobe homes have limited comparable sales. Appraisers must make larger adjustments or use the cost approach as a supplement.
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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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