Three comparables sold at $318,000, $305,000 and $291,000 and are rated superior, similar and inferior to the subject respectively. What does relative comparison analysis indicate?
Correct Answer
B) Between $291,000 and $318,000, with $305,000 the most direct indication
Why this is correct: the superior sale caps the subject and the inferior one floors it, while the comparable rated similar points most directly at the subject itself. Why the other choices are wrong: averaging the three produces a figure with a false air of precision from an analysis that deliberately assigned no dollar amounts; and placing the subject above the superior comparable or below the inferior one contradicts the ratings the analysis is built on.
Why This Is the Correct Answer
Why this is correct: the superior sale caps the subject and the inferior one floors it, while the comparable rated similar points most directly at the subject itself. Why the other choices are wrong: averaging the three produces a figure with a false air of precision from an analysis that deliberately assigned no dollar amounts; and placing the subject above the superior comparable or below the inferior one contradicts the ratings the analysis is built on.
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?
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