Property Valuation
In New York, 'market value' as used in appraisal is defined as:
AThe highest price a buyer paid for similar property in the last 6 months
BThe most probable price that a property would sell for in a competitive and open market under all conditions requisite for a fair sale✓ Correct
CThe assessed value multiplied by the equalization rate
DThe replacement cost of the improvements minus depreciation
Explanation
Market value (as defined by the Appraisal Institute and adopted in New York appraisal practice) is the most probable price that a property should sell for in a competitive, open market under conditions requisite to a fair sale — with both buyer and seller acting prudently and knowledgeably, and the price not being affected by undue stimulus.
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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.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
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.
Math Concepts
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