Property Valuation
In New York, when a commercial property's lease has above-market (contract) rents, the appraiser considers this through:
AIgnoring lease terms and using market rent only
BThe 'leased fee' vs. 'fee simple' distinction—leased fee value may exceed fee simple value when contract rents are above market✓ Correct
CAdding the rent differential as a lump sum to the cost approach
DDeducting a premium from the sales comparison value
Explanation
The 'leased fee' interest (ownership subject to a lease) can be worth more or less than the 'fee simple' interest (unencumbered ownership) depending on whether contract rents are above or below market. Above-market rents increase leased fee value; below-market rents decrease it.
Related New York Property Valuation Questions
- If a property has a net operating income (NOI) of $50,000 and the capitalization rate is 5%, what is the estimated value?
- Assemblage refers to:
- The term 'market value' as used in appraisal is best defined as:
- In New York, a commercial property's 'potential gross income' (PGI) represents:
- In New York City, a residential property's capitalization rate is typically:
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- The 'sales comparison approach' to value is most reliable when:
- In New York, the process by which a property owner may challenge a tax assessment believed to be too high is called:
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