Property Valuation
In North Dakota, the 'comparable sales grid' used in the sales comparison approach requires an appraiser to make adjustments for differences between the subject property and each comparable. Adjustments are made to:
AThe subject property's value
BThe comparable sale's price, adding or subtracting to account for differences from the subject✓ Correct
CBoth properties equally
DThe appraiser's professional fee
Explanation
In the comparable sales grid, adjustments are made to the comparable's sale price (not the subject's value) to account for differences. If the comparable is superior, a negative adjustment is made; if inferior, a positive adjustment is made.
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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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