What distinguishes qualitative analysis from quantitative adjustment in the sales comparison approach?
Correct Answer
C) It ranks comparables against the subject without assigning dollar amounts
Why this is correct: qualitative analysis establishes direction — superior, similar, inferior — and leaves the magnitude unstated because the market has not shown it. Why the other choices are wrong: it is less precise rather than more, which is the trade accepted in exchange for not inventing figures; verification is required of any sale relied on, by either technique; and it is a sales comparison technique, not a cost approach one.
Why This Is the Correct Answer
Why this is correct: qualitative analysis establishes direction — superior, similar, inferior — and leaves the magnitude unstated because the market has not shown it. Why the other choices are wrong: it is less precise rather than more, which is the trade accepted in exchange for not inventing figures; verification is required of any sale relied on, by either technique; and it is a sales comparison technique, not a cost approach one.
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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A building cost $2,500,000 to construct five years ago. It has an effective age of 8 years and a total economic life of 50 years. Using the age-life method, what is the amount of accrued depreciation?
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Land in this market is supported at $6.00 per square foot of lot area. A comparable on an 8,000 square foot lot sold for $310,000; the subject sits on 9,000 square feet. What is the comparable’s adjusted price?