Property Valuation
A Charleston, SC property with ocean views commands a premium over inland comparable properties. This premium reflects which appraisal adjustment?
AFunctional obsolescence adjustment
BLocation adjustment✓ Correct
CCondition adjustment
DTime adjustment
Explanation
Location adjustments in the sales comparison approach account for differences in the quality, desirability, and amenities of a property's location, including view premiums.
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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.
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.
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