Property Valuation
A Virginia appraiser who uses the sales comparison approach and makes adjustments totaling more than 25% of the comparable's adjusted price should:
AProceed normally without comment
BSeek better comparables and explain why such large adjustments were necessary✓ Correct
CSwitch to only the cost approach
DReport the issue to VREB
Explanation
Large net or gross adjustments reduce a comparable's reliability. Fannie Mae guidelines suggest care when net adjustments exceed 15% or gross adjustments exceed 25%.
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Key Terms to Know
Gross Rent Multiplier (GRM)
A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
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.
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