Property Valuation
When appraising a single-family home in Seattle, an appraiser would give the MOST weight to the:
ACost approach
BIncome capitalization approach
CSales comparison approach✓ Correct
DAll three approaches equally
Explanation
For residential properties with adequate comparable sales data, the sales comparison approach is given the most weight because buyers' decisions are primarily driven by comparison to similar properties sold in the same market.
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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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