An appraiser who adjusts a comparable's price upward by $5,000 for having one fewer bathroom than the subject property is applying which step of the sales comparison approach?
Why Adjustment for elements of comparison Is Correct
Answer C: Adjustment for elements of comparison
Exam Tip: Property Valuation
Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.
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- In the sales comparison approach, a positive adjustment to a comparable sale means:Property Valuation
- An adjustment in the sales comparison approach for a feature the subject property HAS but the comparable does NOT have requires the appraiser to:Property Valuation
- When adjusting comparables in the sales comparison approach, the appraiser adjusts the comparable, not the subject. If a comp has a superior feature, the adjustment is:Property Valuation
- In the sales comparison approach, an adjustment is made for a feature the comparable has but the subject lacks. This is:Property Valuation
- A NC property appraiser finds three comparable sales adjusted to $285,000, $291,000, and $288,000. The most likely indicated value for the subject is:Real Estate Math
Key Terms to Know
A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
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.
Math Concepts
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