Property Valuation
Which of the following would INCREASE the value of a property according to appraisal principles?
AA railroad track adjacent to the property
BA neighborhood park across the street✓ Correct
COutdated electrical wiring throughout the home
DA floor plan with an unusual, non-functional layout
Explanation
A neighborhood park across the street would likely increase property value (economic progression/positive externality) by providing open space, recreation, and aesthetic appeal. The other options represent forms of obsolescence or negative externalities.
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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.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
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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