Property Valuation
A NC appraiser who adds value to a comparable for its superior condition compared to the subject is:
ACorrect — superior comps are adjusted upward
BIncorrect — a comparable superior to the subject requires a negative (downward) adjustment to the comparable✓ Correct
CCorrect only for residential properties
DNot permitted under USPAP
Explanation
Adjustments are made to the comparable, not the subject. If the comparable is superior (better condition), subtract value from the comparable (negative adjustment) to show what it would have sold for if equal to the subject.
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Key Terms to Know
Comparable Sales (Comps)
Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
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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