Trend analysis of resales in a market supports:
Correct Answer
A) A market conditions adjustment rate over time
Why this is correct: Trend analysis of resales (paired data analysis) isolates the effect of time on value by comparing the sale and resale prices of the same properties. Since the physical features are identical, any price change is attributable to market conditions over time. This provides direct, clean evidence for calculating a market conditions adjustment rate. Why the other choices are wrong: "The contributory value of specific features" is wrong because paired sales analysis intentionally removes feature differences to isolate time. "The property's remaining economic life" is wrong; that is typically estimated through depreciation studies in the cost approach, not resale trend analysis. "The appropriate capitalization rate" is wrong; capitalization rates are derived from income and sale price data of comparable income properties, not specifically from resale trends of the same property. Exam tip: Remember that 'paired sales' or 'resales' are key terms pointing to a market conditions (time) adjustment, not feature adjustments.
Why This Is the Correct Answer
Why this is correct: Trend analysis of resales (paired data analysis) isolates the effect of time on value by comparing the sale and resale prices of the same properties. Since the physical features are identical, any price change is attributable to market conditions over time. This provides direct, clean evidence for calculating a market conditions adjustment rate. Why the other choices are wrong: "The contributory value of specific features" is wrong because paired sales analysis intentionally removes feature differences to isolate time. "The property's remaining economic life" is wrong; that is typically estimated through depreciation studies in the cost approach, not resale trend analysis. "The appropriate capitalization rate" is wrong; capitalization rates are derived from income and sale price data of comparable income properties, not specifically from resale trends of the same property. Exam tip: Remember that 'paired sales' or 'resales' are key terms pointing to a market conditions (time) adjustment, not feature adjustments.
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