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:
Correct Answer
C) Adjustments for the seller's original purchase price under Proposition 13
The seller's original purchase price under Proposition 13 is irrelevant to the sales comparison approach. Prop 13 purchase prices determine the assessed value for property tax purposes only and have no bearing on the market value or the sale price of comparable properties. Adjustments in the sales comparison approach are based on differences between the comparable and subject that affect market value, not historical purchase prices.
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Previous Question
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?
Next Question
An appraiser in California is valuing a property and one comparable was a sale-leaseback transaction where the seller sold the property and immediately leased it back from the buyer at above-market rent. The recorded sale price was $800,000. Under California appraisal practice, how should the appraiser handle this comparable?