Property Valuation
What does it mean when an Oregon appraisal report states that the value conclusion is 'subject to completion' of proposed construction?
AThe appraisal is incomplete and cannot be used
BThe value assumes the property will be completed as described in the plans and specifications; the stated value applies only when construction is finished as proposed✓ Correct
CThe appraiser will complete the report after construction is done
DThe value is contingent on the buyer obtaining financing
Explanation
An 'as-completed' or 'subject to completion' appraisal estimates the value of a property assuming completion of proposed construction, renovation, or repairs as specified in provided plans, specifications, and conditions. For new Oregon construction or major rehab, lenders use this type of appraisal for construction loan approval.
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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.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
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.
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