Property Valuation
A Vermont appraiser notes that a property is in a 'declining market.' How should this affect the appraisal?
AUse only the highest comparable sales without adjustment
BMake appropriate negative time adjustments to comparables, favoring the most recent sales, and clearly disclose market conditions in the report✓ Correct
CUse an automated valuation model only
DAverage all sales over the past 5 years equally
Explanation
In a declining Vermont market, appraisers must make negative time adjustments to reflect falling prices (older sales may show higher prices than current market). USPAP requires appraisers to analyze and disclose market trends.
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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.
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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