A residential property sold for $800,000 six months ago. An identical property next door is being valued today, and the local market has risen 8% since that sale. What time adjustment should be made to the comparable?
Correct Answer
A) Add $64,000 to bring the sale up to current market levels
When using sales comparison, adjustments must be made for market movement between the sale date and valuation date. An 8% increase means adding $64,000 ($800,000 × 0.08) to reflect current market value.
Why This Is the Correct Answer
The market has risen 8% since the comparable sold, so its price is brought forward by 8% of $800,000, which is $64,000. That adjustment puts the sale on today's market footing.
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Previous Question
A comparable home with 200 m² of floor area sold for $900,000. The subject home is similar but has 180 m², and local sales analysis shows each extra square metre adds about $2,500. What is the comparable's sale price adjusted to the subject?
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A residential property sold for $800,000 six months ago. Since then, the local market has experienced 4% growth. What adjustment should be made to use this sale as a comparable for current valuation purposes?