Property Valuation
In New York, when an appraiser reconciles the three approaches to value, they:
AMust average the three indicated values
BWeight each approach based on its reliability and applicability to the specific property type and market✓ Correct
CAlways select the lowest indicated value
DDisregard the cost approach for all properties
Explanation
Reconciliation is the appraiser's analysis of the relative strengths and weaknesses of each approach and the assignment of appropriate weight to each indicated value to arrive at a final value conclusion. Averaging is not required or appropriate.
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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.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
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