Florida Real Estate Broker ExaminationValuation and Market AnalysisMedium
A real estate agent is preparing a Comparative Market Analysis (CMA) for a seller. The subject property has a two-car garage, while a comparable sale in the neighborhood has only a one-car garage and sold for $320,000. If the market value of an additional garage space is estimated at $15,000, how should the comparable sale be adjusted?
- ANo adjustment is necessary as the difference balances out.
- BAdd $15,000 to the comparable's sale price, making it $335,000.
- CSubtract $15,000 from the comparable's sale price, making it $305,000.
- DAdd $15,000 to the subject property's value, making it $335,000.
Show answer & explanationAnswer & explanation
Correct answer: B. Add $15,000 to the comparable's sale price, making it $335,000.
In the sales comparison approach, adjustments are always made to the comparable properties, not the subject property. If a comparable is inferior to the subject in a particular feature, the value of that feature is added to the comparable's sale price. Conversely, if a comparable is superior, the value is subtracted.
Why the other options are wrong
- A. A significant difference like a garage space requires an adjustment to accurately compare properties.
- C. Subtracting would imply the comparable was superior, which is incorrect in this scenario.
- D. Adjustments are never made to the subject property in the sales comparison approach.
Sales Comparison Adjustments
Modifications made to comparable property sales prices to account for differences with the subject property.
- Always adjust the comparable, never the subject.
- If comparable is inferior to subject, add value to comparable.
- If comparable is superior to subject, subtract value from comparable.
Memory trick: Always adjust the comparable to match the subject's features, like balancing a scale.