A listing service record notes seller-paid closing costs. Why does this matter to the comparable?
Correct Answer
A) The recorded price may exceed cash-equivalent value
Why this is correct: Seller concessions, like paid closing costs, can inflate the sale price because the buyer agrees to a higher price in exchange for the concession. The recorded price may not reflect the cash-equivalent value of the property alone. Why the other choices are wrong: "The sale must be excluded as a non-market transaction" is wrong; concessions are common in market transactions but require adjustment. "The concession increases the property's living area" is false; concessions are financial, not physical. "Concessions are disregarded in the sales comparison" is incorrect; they must be analyzed and adjusted. Exam tip: Always adjust comparable sales for concessions to estimate cash-equivalent value.
Why This Is the Correct Answer
Why this is correct: Seller concessions, like paid closing costs, can inflate the sale price because the buyer agrees to a higher price in exchange for the concession. The recorded price may not reflect the cash-equivalent value of the property alone. Why the other choices are wrong: "The sale must be excluded as a non-market transaction" is wrong; concessions are common in market transactions but require adjustment. "The concession increases the property's living area" is false; concessions are financial, not physical. "Concessions are disregarded in the sales comparison" is incorrect; they must be analyzed and adjusted. Exam tip: Always adjust comparable sales for concessions to estimate cash-equivalent value.
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