When conducting a CMA for a three-bedroom house, which property would be the MOST appropriate comparable sale?

Q: What is the correct answer to: When conducting a CMA for a three-bedroom house, which property would be the MOST appropriate comparable sale?

The correct answer is A three-bedroom house sold 3 months ago, 1km away. Option C is correct because it provides the best balance of comparable characteristics. The three-bedroom house matches the subject property type exactly, which is the most critical factor in CMA analysis. The 3-month timeframe is reasonably recent for market analysis purposes, ensuring the sale reflects current market conditions. While 1km distance is greater than some other options, proximity within the same general area is acceptable when property type and characteristics align perfectly. This follows Australian Property Institute principles that prioritize property similarity over immediate proximity in comparable selection.

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

Comparative Market Analysis involves selecting recent sales of similar properties to estimate market value. Key selection criteria include property type (house, unit, townhouse), size (bedroom/bathroom count), land area, construction quality, and location. The Australian Property Institute emphasizes that comparables should be as similar as possible to the subject property. Proximity is important but secondary to property characteristics. Sales should typically be within 3-6 months for accuracy, though this may extend in slower markets. The process supports accurate valuations for lending, selling, and insurance purposes under Australian valuation standards.

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

Remember STAR: Similar property Type, Appropriate Recency (3-6 months), and Reasonable proximity. Think of a movie star - they need to match the role (type), be current/relevant (recent), and be available in the area (proximity). Property type similarity is the leading role, recency is the supporting actor, and proximity is the location scout. When evaluating CMA comparables, apply STAR in order: first check if property types match (house vs house), then assess if the sale is recent enough (under 6 months preferred), finally consider if proximity is reasonable (same suburb/area). This hierarchy helps prioritize the most important factors.

Q: What exam tip applies to this Valuation question?

Always prioritize property type and bedroom count matching over proximity and recency. A three-bedroom house 1km away sold 3 months ago beats a two-bedroom unit next door or a four-bedroom house nearby.

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

A real estate agent preparing a CMA for a client's three-bedroom house in Parramatta finds several recent sales: a two-bedroom unit across the street, a three-bedroom house in nearby Westmead, and a four-bedroom house around the corner. Despite the closer proximity of other options, the agent selects the three-bedroom house in Westmead as the primary comparable because it matches the property type and bedroom count exactly, providing the most reliable value indication for the client's pricing strategy.

Question

ValuationCMAMEDIUM

When conducting a CMA for a three-bedroom house, which property would be the MOST appropriate comparable sale?

Answer Options

A

A two-bedroom unit sold 2 months ago, 500m away

B

A three-bedroom house sold 8 months ago, 200m away

C

A three-bedroom house sold 3 months ago, 1km away

D

A four-bedroom house sold 1 month ago, 300m away