Property Valuation
In Ohio, a 'hypothetical condition' in an appraisal is when the appraiser:
AMakes standard assumptions about the market
BAssumes something that is known to be false but is used for analytical purposes✓ Correct
CUses only one approach to value
DDeclines to inspect the property
Explanation
A hypothetical condition is a condition that is known to be contrary to fact but is assumed for the purpose of the analysis — such as appraising a property as if proposed construction were completed.
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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.
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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