Market data show home prices in a neighborhood have been increasing by 0.5% per month. A comparable went under contract 6 months before the effective date of the appraisal and closed for $360,000. Ignoring all other differences, what is the comparable’s time-adjusted indication as of the appraisal date?
Correct Answer
A) $370,800
Step 1: Monthly market change = 0.5%. Step 2: Total time adjustment for 6 months = 0.5% × 6 = 3.0%. Step 3: Dollar adjustment = $360,000 × 3% = $10,800. Step 4: Because the market increased after the comparable went under contract, add the increase to the older comparable sale. Step 5: Time-adjusted indication = $360,000 + $10,800 = $370,800.
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Previous Question
Comparable Sale 2 closed at $390,000 with the seller paying $10,000 of the buyer’s closing costs. Market analysis indicates that this concession inflated the comparable’s effective price by only $6,000. How should the appraiser adjust the comparable for concessions?
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A subject property sold in an arm’s-length transaction 10 months ago. How may that prior sale generally be handled in the sales comparison approach?