Property Valuation
What is 'paired sales analysis' in real estate appraisal and why is it important?
AThe analysis of two properties sold by the same seller in the same year
BA technique comparing pairs of sales that differ in only one feature to isolate the market value contribution of that feature✓ Correct
CThe comparison of a property's list price and sale price to determine market conditions
DAn appraisal method using two separate appraisers to check each other's work
Explanation
Paired sales analysis (matched pairs) is a technique for deriving market-supported adjustments by comparing two sales that are identical except for one feature. For example, comparing two similar Harrisburg homes — one with a fireplace, one without — to isolate the market value of the fireplace.
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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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