A California listing agent is preparing a CMA for a property in a neighborhood where the local city recently enacted a vacancy tax on vacant residential properties. Two comparables are available: one was occupied at the time of sale and one had been vacant for over a year and subject to the vacancy tax. How should the agent handle this difference in the CMA?
Correct Answer
A) Use both comparables and note the vacancy status, but recognize that the vacant property may have sold at a discount due to the additional tax burden and carrying costs
A number of California cities tax residential property that sits vacant beyond a set number of days in a year. Oakland's voter-approved vacant property tax, for example, runs into the thousands of dollars per parcel annually. That recurring charge adds to the cost of holding the property and can make an owner readier to accept a lower price, so the vacant comparable's price may already carry a discount the occupied one does not. The sale is still usable: the agent keeps both comparables, reports the vacancy status, and accounts for its likely effect on price rather than discarding the sale or adjusting the subject.
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An appraiser using the sales comparison approach identifies a comparable that sold for $920,000 as part of a 1031 exchange under IRC §1031. The buyer was an exchanger operating under the 45-day identification deadline and had limited replacement property options remaining. How should the appraiser treat this comparable?
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In preparing a CMA for a California property, a real estate agent considers several types of adjustments to comparable sales. All of the following are recognized categories of adjustment in the California sales comparison approach EXCEPT: