Final answer:
Appraisers can use location adjustments to determine the dollar value of a property's location. They compare the location of the property being appraised to similar properties that have recently sold in the same area. Various methods such as paired sales analysis and cost approach can be used to come up with a dollar adjustment for location.
Step-by-step explanation:
When an appraiser analyzes residential properties, they can use the concept of location adjustments to determine the dollar value of a property's location. This involves comparing the location of the property being appraised to similar properties that have recently sold in the same area. If a property is in a more desirable location, such as a neighborhood with good schools or a convenient location, it will have a higher value compared to similar properties in less desirable locations. Conversely, if a property is in a less desirable location, such as near a busy road or in a high-crime area, it will have a lower value compared to similar properties in better locations.
Appraisers can use a variety of methods to come up with a dollar adjustment for location. One common method is called the paired sales analysis, where the appraiser looks at recent sales of similar properties in different locations and compares the sale prices to determine the value difference attributed to location. Another method is the cost approach, where the appraiser estimates the cost of reproducing the property in a different location and adjusts the value based on the location difference.