The best method to determine fair market value is:
Correct Answer
C) An appraisal by a licensed appraiser under USPAP
An appraisal performed under the Uniform Standards of Professional Appraisal Practice is what lenders, courts and agencies treat as the determination of fair market value. Other choices: a comparative market analysis is a pricing opinion from an agent, not an appraisal, and carries no such standing; the 28/36 guideline measures what a borrower can afford, not what a property is worth; and a gross rent multiplier is a screening shortcut for income property, not a value conclusion.
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Related Topics & Key Terms
Related Topics:
Key Terms:
Related Concepts
Many states have laws to limit how much property taxes can increase each year, regardless of market value fluctuations.
Various programs and exemptions exist to reduce the property tax burden for specific groups, such as seniors, homesteaders, or veterans.
A transfer tax is a tax imposed on the transfer of ownership of real estate.
More Valuation Market Analysis Questions
A luxury condominium in Manhattan is being appraised for a buyer who will be subject to the mansion tax. The purchase price is $1.2 million. When preparing the market analysis, which statement about the mansion tax impact is correct?
When commercial office demand and supply decline equally:
The main real estate market participants include:
An appraiser is using the income approach to value a 12-unit rental building in Brooklyn. The building generates $180,000 in annual gross rental income. Operating expenses total $54,000 annually. The appraiser determines that a 7.5% capitalization rate is appropriate for this type of property in this location. What is the indicated value using the income approach?
A first-time buyer in New York City asks their agent about the difference between owning a co-op versus a condo. What is the fundamental ownership difference the agent should explain?
- → The cost approach is generally the least reliable of the three approaches for valuing a building constructed in the 1930s. The main reason is:
- → An example of functional obsolescence is:
- → A lender receives a BPO from a broker. All of the following are acceptable uses of a BPO EXCEPT.
- → A lender assigns an appraiser who has never worked in the subject market and does not have access to local data sources. The lender says the appraiser can learn as they go because the fee is low and the turn time is fast. For a Fannie Mae mortgage assignment, what is the best response?
- → A parcel is in a desirable retail corridor and buyers want it, but an unresolved title defect and missing legal access make it hard to close. Which element of value is most directly impaired?
- → An appraiser has been asked to provide a restricted appraisal report instead of an appraisal report for a lending assignment. Under USPAP, what is the key difference between these two report options?
- → Who typically hires the appraiser in a real estate transaction?
- → An appraiser valuing a newly built warehouse with no rental history uses the cost approach as the primary valuation method. Why is the cost approach often most relevant for new or special-purpose properties?
- → For appraising a vacant lot for single-family residence construction, which approach applies?
- → What does the term 'reconciliation' mean in the context of a real estate appraisal?
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