A waterfront property sold for $2,800,000. A comparable property that sold at the same time and is identical except that it has no water access sold for $1,900,000. Using paired sales analysis, what is the contributory value of the waterfront access?
Correct Answer
B) $900,000
Paired sales analysis isolates the value of one feature by comparing two sales that differ only in that feature. Here $2,800,000 − $1,900,000 = $900,000 is the contributory value of the waterfront access.
Why This Is the Correct Answer
With every other factor held equal, the $900,000 difference between the two sale prices is the market's measure of what the waterfront contributes.
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