Mrs. Jones, an appraiser, is appraising a single family residence for which she has located six comparable properties, all sold within the past six months. The subject property is rented for $1,500 per month. It is a custom-built home, approximately three years old. Mrs. Jones would probably give the most weight in her final estimate of value to which of the following appraisal methods?

Available Options are:

1 Cost approach

2 Market data approach

3 Income approach

4 Gross rent multiplier

Market data approach

Explanation:

The Market data is more relaible source to finding the home's market value. As in the given scenario, it is evident that the property is not an investment property, hence it is more appropriate to find the asset's value using the market data rather using the rental value to compute the value of the asset.

2) Market data approach

Explanation:

In real estate, the most common appraisal method is the sales comparison (or market data) approach. The logic behind this method is very simple, you take the selling price of comparable homes to determine the basis of the appraised home. It sounds logical that if several similar house sin your neighborhood were sold at $300,000, your house will also sell for approximately $300,000.

Of course the method is not that simple, the appraiser considers the state of the home, its characteristics, any improvements made, how well it was maintained, the size, etc. For example, the house at the end of the street sold for $350,000 but it had a larger backyard and s swimming pool. The rest was very similar, so the appraiser will take the $350,000 and subtract the value added by the pool and the extra area in the backyard. Your house might be worth $320,000, which is similar to the market price of other similar houses.

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