Property Valuation
The South Dakota sales comparison approach to value is MOST reliable when:
AValuing unique commercial properties
BThere are many recent sales of comparable properties✓ Correct
CAppraising new construction with no comparable sales
DValuing income-producing properties
Explanation
The sales comparison approach is most reliable when there are sufficient recent sales of similar (comparable) properties in the same market area to support meaningful adjustments.
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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.
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.
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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