Property Valuation
When comparing comparable sales for a single-family home in Oklahoma, an appraiser makes adjustments for differences. Which statement about adjustments is correct?
AIf the comparable has a feature the subject lacks, the appraiser adds to the subject's value
BIf the comparable is inferior to the subject, the appraiser adds to the comparable's adjusted sale price; if the comparable is superior, the appraiser subtracts from its price✓ Correct
CAdjustments are always made in round numbers for simplicity
DNo adjustments are made if properties are in the same city
Explanation
Adjustments are made to the comparable, not the subject. If the comparable is inferior (lacks a garage the subject has), add to the comparable's price.
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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.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
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.
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