Property Valuation
In the sales comparison approach, a positive adjustment to a comparable sale means:
AThe comparable is superior to the subject property
BThe comparable is inferior to the subject property, so value is added to bring it up to the subject's level✓ Correct
CThe subject property should be priced higher
DThe market is appreciating
Explanation
When a comparable is inferior to the subject in some feature, a positive adjustment is added to the comparable's sale price to account for what the comparable would have sold for if it had that feature.
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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.
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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