Property Valuation
A Pennsylvania appraiser determines that the 'as-is' value of a property needing a new roof ($15,000 cost) is $200,000. The 'as-repaired' value would be approximately:
A$185,000
B$200,000
C$215,000✓ Correct
D$240,000
Explanation
As-repaired value = As-is value + Value increase from repair. If the $15,000 roof replacement adds approximately $15,000 in value (cost does not always equal value contribution), the as-repaired value would be approximately $215,000.
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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.
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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