California State BOE Appraiser Certification Practice Exam

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What does it mean for a property to be "over-improved"?

When its features are outdated

When improvements surpass the property's market value

A property is considered "over-improved" when the enhancements made to it exceed a level that the market can support in terms of value. This often means that the cost of improvements, such as high-end renovations or additions, has gone beyond what potential buyers in the market would be willing to pay for the property. An over-improved property may not yield a return on investment that is proportional to the amount spent on improvements, leading to a situation where the property's value does not align with the level of upgrades made.

This concept is important for appraisers to understand, as it influences market evaluations and investment decisions. Thus, when assessing a property's marketability and value, recognizing over-improvement helps in predicting potential market resistance or reduced desirability among buyers.

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When it is located in a distressed area

When the property has too many utilities installed

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