Property Valuation
Paired sales analysis in the sales comparison approach is used to:
ACompare listing prices of competing properties
BIsolate the value contribution of a single feature by comparing sales that differ only in that feature✓ Correct
CDetermine the average price per square foot in a market
DMatch buyers with sellers of comparable properties
Explanation
Paired sales analysis (or matched pairs) isolates the contributory value of a specific feature by comparing two sales that are identical except for the feature being analyzed, allowing the appraiser to determine the value of 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.
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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