Property Valuation
In South Carolina, the 'sales comparison approach' requires adjustments to comparable sales for differences from the subject property. If a comparable has an extra bathroom the subject lacks, the appraiser should:
AAdd value to the subject property
BSubtract the bathroom's value from the comparable's price✓ Correct
CIgnore the difference if it is minor
DUse a different comparable that is identical
Explanation
In the sales comparison approach, adjustments are made to comparable sales to make them equivalent to the subject. If the comparable is superior (has an extra bathroom), the appraiser subtracts that feature's value from the comparable's sale price.
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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.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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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