Property Valuation
In Washington, an appraiser analyzing a high-end residential property in Medina or Mercer Island should be especially careful to:
AUse national data instead of local comparables due to the unique properties
BFind comparables from the same micro-market to ensure they reflect the same buyer pool and market dynamics✓ Correct
CUse only the cost approach since sales comparables are limited
DRely on assessed values as the primary indicator of value
Explanation
For high-end, unique properties in exclusive Washington markets like Medina or Mercer Island, appraisers must find the best available comparables within the same micro-market. National or even regional data may not reflect the specific buyer pool and dynamics of ultra-luxury markets.
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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.
Math Concepts
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