A comparable sold for $355,000. It is in a superior location worth 5%, and has 200 fewer square feet of gross living area than the subject at $70 per square foot. What is the adjusted price?
Correct Answer
C) $351,250
Why this is correct: the comparable is superior in location and inferior in size, so the adjustments oppose. Calculation: $355,000 - ($355,000 × 0.05) + (200 × $70) = $355,000 - $17,750 + $14,000 = $351,250. Why the other choices are wrong: $386,750 adds both and $323,250 deducts both; $337,250 makes the location adjustment and omits the size adjustment.
Why This Is the Correct Answer
Why this is correct: the comparable is superior in location and inferior in size, so the adjustments oppose. Calculation: $355,000 - ($355,000 × 0.05) + (200 × $70) = $355,000 - $17,750 + $14,000 = $351,250. Why the other choices are wrong: $386,750 adds both and $323,250 deducts both; $337,250 makes the location adjustment and omits the size adjustment.
More Sales Comparison Questions
A property generates $85,000 in Net Operating Income and sells for $1,062,500. What is the overall capitalization rate?
A property has potential gross income of $180,000, vacancy and collection loss of $15,000, and operating expenses of $65,000. What is the Net Operating Income?
A comparable sale occurred 8 months ago for $425,000. Market conditions indicate property values have increased 0.5% per month since that time. What is the adjusted sale price?
A property generates $150,000 in potential gross income. Market data indicates a 7% vacancy rate and operating expenses of 35% of effective gross income. If the cap rate is 9.5%, what is the indicated value?
A property sold for $320,000 one year ago. If market conditions have improved by 6% since that sale, what is the time-adjusted sale price for comparison purposes?
A commercial building cost $2,500,000 to construct. The land value is $600,000. If the building has suffered 15% physical deterioration and 8% functional obsolescence, what is the depreciated cost of the improvements?
A building's gross rent multiplier (GRM) is 120. If the monthly rent is $2,500, what is the indicated value?
In the cost approach, economic obsolescence is characterized as:
The concept of regression in property values means that:
A commercial property has potential gross income of $120,000, vacancy and collection loss of 8%, and operating expenses of $35,000. Using a cap rate of 9.5%, what is the indicated value?
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Cost Approach
13.6% of exam
Income Approach
8.2% of exam