Property Valuation
An appraiser performing a drive-by appraisal (exterior-only inspection) for a Rhode Island property must note this limitation in the appraisal report as a(n):
AExtraordinary assumption
BHypothetical condition
CScope of work limitation✓ Correct
DValue conclusion disclaimer
Explanation
When an appraiser performs a limited inspection (such as exterior-only), this limitation on the scope of work must be disclosed and explained in the appraisal report, as it affects the reliability of the value conclusion.
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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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