A California appraiser applies paired sales analysis to measure the market impact of a Mello-Roos special tax. Home A, located within a Mello-Roos district with an annual special tax of $5,400 and 22 years remaining on the bond, sold for $1,180,000. Home B, an otherwise identical property outside the district, sold for $1,225,000. What does the paired sales analysis indicate as the market-derived value impact of the Mello-Roos burden?
Correct Answer
B) approximately $45,000, representing the price difference buyers demonstrated in the market
Paired sales analysis isolates the value impact of a single variable by comparing two otherwise identical properties. Home B ($1,225,000) minus Home A ($1,180,000) equals $45,000. This price difference directly reflects what the market — through actual buyer behavior — determined the Mello-Roos burden to be worth. No capitalization rate is applied; the market has already expressed its judgment through the transaction prices.
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A California appraiser is valuing a property near the Hayward Fault in the San Francisco Bay Area. Two comparable properties recently sold: one in a designated Alquist-Priolo Earthquake Fault Zone and one outside the zone. The subject property is within the Alquist-Priolo zone. How should the appraiser address this in the sales comparison approach?
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