Property Valuation
In the sales comparison approach, an appraiser in Tacoma makes a $5,000 upward adjustment to a comparable for a feature the subject has but the comparable lacks. This means:
AThe comparable is superior and the adjustment decreases its value
BThe comparable is inferior and the adjustment increases its value to match the subject✓ Correct
CThe subject is inferior in this feature
DThe adjustment is deducted from the subject's value
Explanation
In the sales comparison approach, adjustments are made to the comparable, not the subject. If the subject has a feature the comparable lacks, the comparable is inferior in that respect, and an upward adjustment is added to the comparable's price.
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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.
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.
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