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?
Correct Answer
C) Adjust the sale price upward by $32,000 to $832,000
When using past sales as comparables, adjustments must be made for market movement since the sale date. With 4% market growth, the comparable sale price should be adjusted upward by $800,000 × 4% = $32,000 to reflect current market conditions.
Why This Is the Correct Answer
With 4% growth since the sale, the comparable is adjusted upward by 4% of $800,000, which is $32,000, giving $832,000 in today's terms.
Why the Other Options Are Wrong
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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?
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