Property Valuation
When appraising a single-family home in Portland using the sales comparison approach, an appraiser finds a comparable that is inferior in one feature worth $15,000 to the subject property. The appraiser should:
ASubtract $15,000 from the subject property's value
BAdd $15,000 to the comparable's sale price✓ Correct
CSubtract $15,000 from the comparable's sale price
DIgnore the difference if it is less than 10% of value
Explanation
In the sales comparison approach, adjustments are made to the comparable, not the subject. If the comparable is inferior (worth less) than the subject in some feature, a positive adjustment is added to the comparable's price to make it equivalent to the subject.
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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.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
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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