Property Valuation and Appraisal Flashcards

What is the primary method used by real estate agents to estimate the market value of a residential property?

Answer: Comparative market analysis (CMA)

Real estate agents primarily use a Comparative Market Analysis (CMA), which compares recent sales of similar properties in the same area to estimate market value.

Which of the following factors is generally considered MOST important when selecting comparable sales for a residential property appraisal?

Answer: Proximity of the comparable properties to the subject property

Proximity is the most critical factor as properties in the same suburb or street share similar locational attributes, making them the most reliable comparables.

In Australian real estate, who is legally authorised to provide a formal property valuation?

Answer: A certified practising valuer (CPV)

Only a certified practising valuer (CPV) registered under state legislation is legally authorised to provide a formal property valuation in Australia.

What is the key difference between a price appraisal by a real estate agent and a formal property valuation?

Answer: A formal valuation is prepared by a licensed valuer and is legally recognised, while a price appraisal is an agent's estimate

A formal valuation is conducted by a licensed valuer and is recognised for legal and lending purposes, whereas a price appraisal is an agent's market estimate not valid for formal financial purposes.

Which of the following best describes 'capital growth' in residential property?

Answer: The increase in a property's market value over time

Capital growth refers to the increase in a property's market value over time, which is a key measure of investment performance in Australian real estate.

When conducting a comparative market analysis, which of the following should an agent adjust for when comparing properties?

Answer: Differences in property features such as number of bedrooms, land size, and condition

When using comparable sales, agents must adjust for differences in features such as bedrooms, bathrooms, land size, and condition to ensure an accurate comparison.

How many comparable sales should an agent ideally reference when preparing a residential price appraisal in Australia?

Answer: A minimum of three recent comparable sales to support the estimated range

Best practice and many state regulations require agents to reference at least three recent comparable sales to provide a credible, evidence-based price appraisal.