When using the comparison approach, which adjustment would be most appropriate for a comparable property that sold 4 months ago in a rapidly appreciating market?
Correct Answer
A) Upward adjustment for time
In a rapidly appreciating market, an upward time adjustment would be appropriate because the comparable property likely sold for less than it would sell for today. The adjustment accounts for market appreciation over the 4-month period.
Why This Is the Correct Answer
Option A is correct because in a rapidly appreciating market, property values increase over time. A comparable property that sold 4 months ago would have sold for less than its current market value due to market appreciation during that period. To make this comparable useful for current valuation, an upward time adjustment is necessary to account for the market appreciation that has occurred since the sale. This adjustment brings the historical sale price up to current market levels, making it a valid comparison point for today's valuation.
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