Property Valuation
The 'appraisal process' in South Dakota follows a standard sequence. Which step comes FIRST?
AData collection and analysis
BApplication of the three approaches to value
CDefining the appraisal problem (property identification, purpose, effective date)✓ Correct
DReconciliation and final value estimate
Explanation
The appraisal process begins with defining the problem: identifying the property, the purpose of the appraisal, effective date, type of value, and scope of work. This step guides all subsequent analysis.
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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.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market 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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