Property Valuation
When reconciling the three approaches to value in a Vermont residential appraisal, the appraiser typically gives the MOST weight to:
AThe cost approach, as it reflects replacement cost
BThe sales comparison approach, as it best reflects actual market behavior for residential properties✓ Correct
CThe income approach, as all homes have rental potential
DThe average of all three approaches
Explanation
For typical Vermont residential properties, the sales comparison approach is given the most weight in reconciliation because it directly reflects what willing buyers are actually paying in the current market. The cost and income approaches serve as checks on reasonableness.
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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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