A comparable with a fireplace sold six months ago for $265,000. A comparable without one, otherwise identical, sold this month for $258,000. The market has risen 0.5% per month. What contribution does the pair indicate for the fireplace?
Correct Answer
C) $14,950
Why this is correct: the two sales must be placed at the same date before the physical difference can be read. Bringing the older sale forward: $265,000 × 1.03 = $272,950; $272,950 - $258,000 = $14,950. Why the other choices are wrong: $7,000 compares the two raw prices and credits the fireplace with nothing but six months of market movement working against it; $14,740 brings the newer sale backward instead, which answers the question as of six months ago rather than today; $950 adjusts the older sale downward, moving it the wrong way in a rising market.
Why This Is the Correct Answer
Why this is correct: the two sales must be placed at the same date before the physical difference can be read. Bringing the older sale forward: $265,000 × 1.03 = $272,950; $272,950 - $258,000 = $14,950. Why the other choices are wrong: $7,000 compares the two raw prices and credits the fireplace with nothing but six months of market movement working against it; $14,740 brings the newer sale backward instead, which answers the question as of six months ago rather than today; $950 adjusts the older sale downward, moving it the wrong way in a rising market.
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
Related Tools
Previous Question
A comparable sold 18 months ago for $324,000 in a market rising 0.35% per month on a simple basis. It is superior to the subject in features by $11,000. What is the adjusted price?
Next Question
A four-bedroom comparable sold for $355,000 and an otherwise identical three-bedroom comparable sold for $340,000. The subject has three bedrooms. What is the adjusted price of the four-bedroom comparable?