A comparable sold for $325,000 with below-market seller financing whose benefit to the buyer is measured at $12,000. What is the cash-equivalent price?
Correct Answer
C) $313,000
Why this is correct: favorable financing is part of what the buyer paid for, so its value comes out to leave what the real property alone was worth. Calculation: $325,000 - $12,000 = $313,000. Why the other choices are wrong: $337,000 adds the benefit, charging the property for an advantage the buyer received; $325,000 carries a financing premium into every later adjustment; $301,000 deducts $24,000, twice the measured benefit.
Why This Is the Correct Answer
Why this is correct: favorable financing is part of what the buyer paid for, so its value comes out to leave what the real property alone was worth. Calculation: $325,000 - $12,000 = $313,000. Why the other choices are wrong: $337,000 adds the benefit, charging the property for an advantage the buyer received; $325,000 carries a financing premium into every later adjustment; $301,000 deducts $24,000, twice the measured benefit.
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A property sold for $450,000 six months ago. Market conditions have improved by 2% during this period. What is the time-adjusted sale price for comparison purposes?
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