Property Valuation
An appraiser determines that the subject property has 2,000 square feet and a comparable sold for $90 per square foot with 1,800 square feet. Using gross living area analysis, what does the comparable suggest the subject is worth?
A$162,000
B$180,000✓ Correct
C$144,000
D$198,000
Explanation
If the comparable sold at $90/sq ft, and we apply that same rate to the subject: $90 × 2,000 = $180,000. (Note: in practice adjustments would be made, but the direct calculation yields $180,000.)
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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.
Math Concepts
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