Property Valuation
When appraising a Pennsylvania mixed-use building (retail/residential), the appraiser should:
AUse only the sales comparison approach to single-family homes
BApply the income approach with additional consideration for mixed-use comparable sales and the building's income potential✓ Correct
CAppraise only the residential component
DUse the cost approach exclusively
Explanation
Mixed-use buildings require a comprehensive analysis including the income approach (analyzing all income streams from retail and residential components), mixed-use comparable sales, and potentially the cost approach. The appraiser must weight each approach based on its reliability for the specific mixed-use property type.
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Key Terms to Know
Comparable Sales (Comps)
Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
AppraisalA 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.
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