When conducting a CMA, which of the following comparable sales would be MOST appropriate for valuing a 4-bedroom house built in 1995?

Q: What is the correct answer to: When conducting a CMA, which of the following comparable sales would be MOST appropriate for valuing a 4-bedroom house built in 1995?

The correct answer is A 4-bedroom house built in 1994, sold 1 month ago, 200m away. Option B represents the optimal balance of comparable characteristics. It matches the subject property's bedroom count (4), has virtually identical age (1994 vs 1995 - only 1 year difference), recent sale timing (1 month ago), and reasonable proximity (200m). The bedroom count match is crucial as it indicates similar size and functionality. The age similarity means comparable construction standards, materials, and design era, requiring minimal adjustments. Recent sale timing ensures current market conditions are reflected, while 200m proximity indicates similar location characteristics and market influences.

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

CMA involves analyzing recent sales of similar properties to estimate market value. Under Australian valuation standards, comparables should ideally be sold within 3-6 months, located within 1km (closer preferred), and share similar characteristics including property type, size, age, and condition. The Australian Property Institute emphasizes minimizing adjustments by selecting the most similar properties. Adjustments for differences in size, age, condition, and location introduce uncertainty and reduce reliability. PEXA settlement data provides transparent, verified sale information for CMA analysis. The principle of substitution underpins CMA - buyers won't pay more for a property than they would for a similar alternative.

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

BARN: Bedrooms first, Age second, Recency third, Nearness last. Like choosing the best horse in a barn - you want the right size (bedrooms), right age, recently proven (sale timing), and nearby. A racehorse buyer wouldn't substitute a pony (wrong bedrooms) or an old champion (wrong age) or last year's winner (stale timing) when a perfect match is available nearby. When evaluating CMA comparables, apply BARN in order: 1) Match bedrooms/size first, 2) Find similar age, 3) Prefer recent sales (under 6 months), 4) Choose closer proximity. If you must compromise, do it in reverse order - sacrifice distance before timing, timing before age, age before size.

Q: What exam tip applies to this Valuation question?

Prioritize bedroom count and age matching over proximity and timing. Look for the comparable requiring the fewest and smallest adjustments. Recent sales within 6 months are preferred, but don't sacrifice major characteristic matches for slightly better timing or location.

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

A licensed agent preparing a CMA for a 1990s brick veneer home in Ringwood must choose between recent townhouse sales nearby versus older detached house sales further away. Following proper methodology, they select the detached houses despite greater distance because the property type and age similarities require fewer adjustments. This produces a more reliable valuation estimate, better serves the client's interests, and meets professional standards. The agent documents their selection rationale and adjustment methodology for transparency and professional accountability.

Question

ValuationCMAMEDIUM

When conducting a CMA, which of the following comparable sales would be MOST appropriate for valuing a 4-bedroom house built in 1995?

Answer Options

A

A 3-bedroom house built in 1995, sold 2 months ago, 500m away

B

A 4-bedroom house built in 1994, sold 1 month ago, 200m away

C

A 4-bedroom house built in 2010, sold 3 weeks ago, 100m away

D

A 4-bedroom house built in 1995, sold 8 months ago, 300m away