Property Valuation
In Washington, a 'fee simple' value and a 'leased fee' value of the same property may differ because:
AFee simple value includes personal property
BA leased fee value reflects the property's value subject to existing lease obligations which may differ from market rent✓ Correct
CFee simple requires a more complex appraisal
DLeased fee values are always higher
Explanation
Fee simple value assumes the property is unencumbered and can be rented at current market rates. Leased fee value reflects the actual income rights under existing leases, which may be above or below market rent, creating a higher or lower value than fee simple.
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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.
Fee SimpleThe highest and most complete form of property ownership — absolute ownership with the right to use, sell, or pass the property to heirs.
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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