Property Valuation
An appraisal adjustment for a feature in the sales comparison approach is made to:
AThe appraiser's opinion of value
BThe comparable sale to make it more like the subject property✓ Correct
CThe subject property to make it more like the comparable
DThe listing price of the subject property
Explanation
In the sales comparison approach, adjustments are made to the comparable sale prices (not the subject property). If the comparable is inferior to the subject in some feature, a positive adjustment is added to the comparable's price.
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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.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
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