Property Valuation
In the sales comparison approach, a comparable sale that is superior to the subject property in a given feature requires what adjustment?
AA positive adjustment to the comparable
BA negative adjustment to the comparable✓ Correct
CA positive adjustment to the subject
DNo adjustment is needed
Explanation
When a comparable is superior to the subject, the appraiser makes a negative (downward) adjustment to the comparable to make it equivalent to the subject property.
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Key Terms to Know
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.
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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