A buyer paid a $20,000 premium for the lot next door to complete a land assemblage. Under what label is that comparable's price corrected?
Correct Answer
C) Conditions of sale
Why this is correct: The governing concept in the sales comparison approach is that adjustments are made for differences between comparables and the subject. Conditions of sale adjustments account for transactional factors such as motivation, financing, or sale concessions. An assemblage premium paid by a buyer to acquire a lot next door is a special motivation falling under conditions of sale, requiring an adjustment to reflect market value. Why the other choices are wrong: "Financing terms" is incorrect because financing adjustments relate to loan terms, not assemblage premiums. "Market conditions" is incorrect because market conditions adjustments account for time-related changes, not buyer-specific motivations. "Physical characteristics" is incorrect because physical adjustments are for differences in property attributes, not sale conditions. Exam tip: Assemblage premiums are classic conditions of sale adjustments; strip them out to normalize the comparable.
Why This Is the Correct Answer
Why this is correct: The governing concept in the sales comparison approach is that adjustments are made for differences between comparables and the subject. Conditions of sale adjustments account for transactional factors such as motivation, financing, or sale concessions. An assemblage premium paid by a buyer to acquire a lot next door is a special motivation falling under conditions of sale, requiring an adjustment to reflect market value. Why the other choices are wrong: "Financing terms" is incorrect because financing adjustments relate to loan terms, not assemblage premiums. "Market conditions" is incorrect because market conditions adjustments account for time-related changes, not buyer-specific motivations. "Physical characteristics" is incorrect because physical adjustments are for differences in property attributes, not sale conditions. Exam tip: Assemblage premiums are classic conditions of sale adjustments; strip them out to normalize the comparable.
More sales-comparison-approach Questions
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