Property Valuation
In West Virginia, an appraiser who uses the sales comparison approach and makes adjustments for financing terms is accounting for which factor?
APhysical differences between the properties
BSeller concessions or below-market financing that may have inflated the sale price✓ Correct
CLocation differences between the properties
DThe time since the comparable sale
Explanation
If a comparable sale included seller concessions (paying closing costs) or below-market seller financing, the sale price may be artificially inflated. The appraiser adjusts downward for these financing/concession influences to arrive at a 'cash equivalent' sale price.
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Key Terms to Know
Closing Costs
Fees and expenses paid by the buyer and/or seller at the closing of a real estate transaction, in addition to the property's purchase price.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
Math Concepts
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