In the California real estate market, an agent is explaining the sales comparison approach to a seller. The agent states that adjustments are always made to the comparable properties, not to the subject property. Why is this the standard practice in California?
Correct Answer
D) Because the subject property's value is unknown and the comparable's sale price is a known figure that can be adjusted
In the sales comparison approach, the comparable properties have known, verified sale prices, while the subject's value is what is being estimated. Adjustments are made to the comparable's sale price to determine what that comparable WOULD have sold for if it were identical to the subject. This is standard appraisal practice in California and nationwide under USPAP.
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- → The appraisal approach that estimates value by comparing a property to similar recently sold properties is the:
- → The period of time a structure continues to earn sufficient income to continue operations is referred to as the structure’s:
- → An appraiser in California is using the cost approach for a property in Sacramento and must account for entrepreneurial profit (also called developer's profit). A local developer confirms that typical profit margins in the Sacramento market are 15-20% of total development costs. How should the appraiser handle entrepreneurial profit?
- → A California buyer's agent is reviewing comparable sales data and notices that the county recorder's office lists different documentary transfer tax amounts for similar properties in the same city. Some properties show both a county and city transfer tax, while others show only the county tax. What does this difference indicate about the sale verification process?
- → When conducting a sales comparison analysis in California, an appraiser discovers that the subject property has an Accessory Dwelling Unit (ADU) that was built under California's recent ADU legislation. How should the appraiser handle this feature?
- → A California real estate agent is selecting comparable sales for a CMA on a property in Fresno. The agent finds a sale from 14 months ago in the same neighborhood. Under standard California CMA practice, why might the agent hesitate to use this comparable?
- → A California real estate licensee is preparing a CMA and notices that one comparable property sold in a foreclosure auction conducted by a trustee under a deed of trust. How should this sale be handled in the CMA?
- → Compared to other appraisal factors, appraisers generally find the the most difficult calculation to measure precisely.
- → When a comparable sale used in an appraisal was not an arm’s length transaction, this affects the:
- → A property’s cost basis is most affected by an owner’s:
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Previous Question
A California real estate licensee is preparing a CMA and notices that one comparable property sold in a foreclosure auction conducted by a trustee under a deed of trust. How should this sale be handled in the CMA?
Next Question
A property in Alameda County, California sold and the county documentary transfer tax was $825. Alameda County charges $1.10 per $1,000 of the sale price. The City of Oakland charges an additional city transfer tax of $15.00 per $1,000 for properties over $300,000. If only the county transfer tax of $825 was recorded, what was the sale price?