When conducting a CMA for a residential property, which comparable sale would provide the most reliable indication of value?

Q: What is the correct answer to: When conducting a CMA for a residential property, which comparable sale would provide the most reliable indication of value?

The correct answer is A similar property sold 2 months ago in the same street. Option C is correct because it satisfies all three key criteria for reliable comparable sales: proximity (same street ensures identical location factors), recency (2 months is very current), and similarity (similar property characteristics). Same street location is the gold standard for CMA as it eliminates variables like different school zones, traffic patterns, or micro-market conditions. The 2-month timeframe ensures the sale reflects current market conditions, which is crucial in Australia's dynamic property markets. This combination provides the most reliable indication of current market value according to Australian valuation standards.

Q: What background knowledge is needed for this Valuation question?

CMA is a valuation method comparing subject properties to recently sold comparable properties. Under Australian valuation standards, three factors determine comparable reliability: location (same street > same suburb > adjacent suburb), time (within 3-6 months preferred), and similarity (size, age, condition, features). The Australian Property Institute and state Real Estate Institutes provide guidelines emphasizing that location proximity typically outweighs other factors. CMAs must comply with Australian Consumer Law regarding accurate representations. PEXA settlement data provides reliable sale information. The method assumes market value reflects recent arm's length transactions between willing parties with reasonable knowledge of relevant facts.

Q: What is a good way to remember the answer to this Valuation question?

Remember 'LTS' - Location, Time, Similarity - in that order of importance. Think of it like dating: you'd rather date someone who lives on your street (Location) from this year (Time) who's somewhat like you, than someone perfect (Similarity) from another city or from years ago. Location beats everything because 'location, location, location' is the real estate mantra. When you see CMA questions, immediately rank the options using LTS. First eliminate options with poor location (different suburbs), then poor timing (over 6 months old), then poor similarity (very different sizes). The option that scores best across all three factors, with location being most important, is usually correct.

Q: What exam tip applies to this Valuation question?

For CMA questions, prioritize location proximity first (same street beats same suburb), then recency (under 6 months), then similarity. Same street + recent timeframe usually wins over identical property in different location.

Q: How does this Valuation concept apply in Australian real estate practice?

A real estate agent preparing a CMA for a 3-bedroom home in Paddington, Sydney, finds several potential comparables: a 3-bedroom sold 8 months ago on the same street, an identical 3-bedroom sold 2 months ago in nearby Woollahra, and a similar 3-bedroom sold 6 weeks ago three houses down the same street. Following professional standards, the agent would weight the recent same-street sale most heavily, as it best reflects current market conditions for that specific micro-location, providing the most reliable value indication for the client's pricing strategy.

Question

ValuationComparative Market AnalysisMEDIUM

When conducting a CMA for a residential property, which comparable sale would provide the most reliable indication of value?

Answer Options

A

A similar property sold 12 months ago in the same suburb

B

An identical property sold 3 months ago in an adjacent suburb

C

A similar property sold 2 months ago in the same street

D

A larger property sold last month in the same suburb