In real estate appraisal, an adjustment made because of the physical differences in comparable properties is known as what?

In real estate appraisal, an adjustment made due to the physical differences in comparable properties is referred to as "market adjustment." This adjustment takes into account how various physical features—such as the size of the property, the condition of the building, the number of bedrooms and bathrooms, and other tangible elements—can impact the value of a property. By making market adjustments, appraisers aim to ensure that they are comparing properties that reflect similar characteristics to develop a more accurate and fair assessment of value.

The concept behind market adjustments is crucial to the appraisal process because it helps to quantify the differences in value that arise from physical disparities. This systematic approach enhances the reliability of the appraisal by providing a standardized method for accounting for variations among properties being compared.

Understanding market adjustments allows appraisers to provide a defensible rationale for the final value estimate, making it an essential aspect of the appraisal practice.