When using the comparison approach, which adjustment would typically be made to a comparable property that sold with seller financing at below-market interest rates?
Correct Answer
B) Decrease the comparable's sale price
When a comparable sold with favorable seller financing, the buyer likely paid a premium for this benefit, making the sale price higher than it would have been with conventional financing. The comparable's price should be adjusted downward to reflect market value under typical financing conditions.
Why This Is the Correct Answer
Option B is correct because when a comparable sold with favorable below-market seller financing, the buyer likely paid a premium for this financing benefit. The sale price would be artificially inflated compared to what it would have been with conventional market-rate financing. To accurately reflect market value under typical financing conditions, the comparable's sale price must be adjusted downward. This adjustment removes the financing premium and provides a more accurate basis for comparison with the subject property, which would typically be valued assuming conventional financing terms.
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