Property Valuation
An Ohio property's market value increases because a new highway interchange is built nearby, improving access. This increase is attributed to:
AFunctional obsolescence
BExternal (locational) benefit — an increase due to factors outside the property✓ Correct
CPhysical improvement to the property
DHigher cap rates in the market
Explanation
Value changes caused by factors outside the property — such as improved infrastructure, new amenities, or neighborhood improvements — are external (locational) influences on value.
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Key Terms to Know
Capitalization Rate (Cap Rate)
A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
AppraisalA 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.
Math Concepts
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