Property Valuation
An appraiser preparing a USPAP-compliant appraisal report for a Vermont property must include which essential element?
AThe seller's purchase price from 10 years ago
BA clearly stated opinion of value with effective date, subject property description, and scope of work✓ Correct
CA comparison to properties in all 50 states
DA guarantee that the property will sell for the appraised value
Explanation
USPAP (Uniform Standards of Professional Appraisal Practice) requires an appraisal report to include a clearly stated opinion of value, the effective date, a description of the subject property, the scope of work, approaches used, and the appraiser's certification. Appraisals do not guarantee sale prices.
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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.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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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