Property Valuation
In Tennessee, a property that has been appraised for $350,000 but is currently under a lease that is below market rent would likely be valued:
AAt $350,000 regardless of the lease
BAt a discount reflecting the impact of the below-market lease on the property's income and marketability✓ Correct
CAt an amount above $350,000 because leased properties are more valuable
DOnly using the cost approach
Explanation
A below-market lease reduces the property's effective income below market potential. The lease'd fee interest (property encumbered by below-market lease) is typically valued at a discount to the fee simple market value.
Related Tennessee Property Valuation Questions
- In Tennessee, USPAP (Uniform Standards of Professional Appraisal Practice) requires appraisers to:
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- When an appraiser in Memphis must value a warehouse property, they would most likely emphasize which approach?
- In Tennessee, the 'replacement cost new' in the cost approach is the cost to build:
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