A California homeowner purchased their home in 2000 for $400,000. After Proposition 13 annual increases, the assessed value has grown to approximately $530,000 by 2026. However, due to a market downturn, the current market value has dropped to $480,000. Under California law, what can the homeowner request?
Correct Answer
C) A temporary 'decline in value' reassessment (Proposition 8) to reduce the assessed value to the current market value of $480,000
Under Proposition 8 (California Revenue & Taxation Code §51(b)), when a property's current market value falls below its Prop 13 assessed value, the owner can request a temporary decline-in-value reassessment. The assessed value is reduced to the current market value ($480,000). When market values recover, the assessed value returns to the Prop 13 factored base year value (continuing the 2% annual increase from the original base), not the temporarily reduced value.
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Under California law, when a real estate licensee prepares a Comparative Market Analysis (CMA) for a property, what is the legal distinction between a CMA and a formal appraisal?
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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.
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- → A property’s cost basis is most affected by an owner’s:
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