A real estate agent in Los Angeles is preparing a Comparative Market Analysis (CMA) for a single-family home in a neighborhood subject to Proposition 13 tax assessments. When selecting comparable sales, what is the MOST important factor the agent should consider regarding property taxes?
Correct Answer
D) The actual sale price of each comparable rather than the Prop 13 assessed value
In California, Proposition 13 limits assessed values to the base year value plus a maximum 2% annual increase, so the county-assessed value often does not reflect market value. When preparing a CMA, the agent must use actual sale prices of comparable properties, as these reflect true market value rather than the artificially constrained Prop 13 assessed values.
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Previous Question
Broker Juan lists a house for 11 months without selling it. Broker Juan is aware the building needs major structural repairs and is listed at 10% above its fair market value. Broker Juan runs an advertisement in a newspaper stating, “Three bedroom, Adobe. The price will amaze! Move-in ready and turnkey condition. Call Broker Juan today!” This advertisement is improper since:
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An appraiser in San Diego is using the sales comparison approach to value a property in a Mello-Roos Community Facilities District. Comparable #1, located outside the Mello-Roos district, sold for $750,000. Under California appraisal practice, how should the appraiser handle this comparable?