Florida Real Estate Sales Associate Examination Content OutlineReal Estate Valuation and Market AnalysisMedium
A real estate sales associate is preparing a CMA for a 3-bedroom, 2-bathroom home with an attached two-car garage. They find a comparable property that recently sold for $350,000, which has 3 bedrooms, 2 bathrooms, but only a one-car garage. If the market value of an additional garage bay is estimated at $15,000, how should the comparable property be adjusted?
- AMake no adjustment, as garage size is a minor factor.
- BAdjust the subject property's value by adding $15,000.
- CSubtract $15,000 from the comparable's sale price.
- DAdd $15,000 to the comparable's sale price.
Show answer & explanationAnswer & explanation
Correct answer: D. Add $15,000 to the comparable's sale price.
When adjusting comparables, if the comparable is inferior to the subject property in a specific feature (e.g., a smaller garage), the value of that missing feature is added to the comparable's sales price. The comparable property has a one-car garage, while the subject has a two-car garage, making the comparable inferior by one garage bay. Therefore, $15,000 should be added to the comparable's price.
Why the other options are wrong
- A. Garage size can be a significant factor in residential property value.
- B. Adjustments are always made to the comparable property, not the subject property.
- C. Subtracting would imply the comparable is superior, which is incorrect here.
CMA Comparable Adjustments Rule
When making adjustments in a CMA, always adjust the comparable property's sales price to reflect differences compared to the subject property.
- If the comparable is superior to the subject, subtract the value of the superior feature from the comparable's price.
- If the comparable is inferior to the subject, add the value of the inferior/missing feature to the comparable's price.
- The goal is to make the comparable 'equal' to the subject for valuation purposes.
Memory trick: Comparable always bows to the Subject – if it's less, add; if it's more, subtract!