Florida Real Estate Sales Associate Examination Content OutlineReal Estate Valuation and Market AnalysisEasy
A real estate sales associate is preparing a comparative market analysis (CMA) for a seller client. Which of the following is the MOST critical step in ensuring the CMA provides an accurate estimate of value?
- AUsing only properties listed by the same brokerage as the subject property to maintain consistency.
- BAdjusting the comparable properties to reflect differences from the subject property.
- CFocusing solely on properties that sold within the last year, even if they are in different neighborhoods.
- DCollecting a large number of comparable sales data, regardless of their similarity to the subject property.
Show answer & explanationAnswer & explanation
Correct answer: B. Adjusting the comparable properties to reflect differences from the subject property.
Adjusting comparable properties for differences from the subject property is crucial. This step accounts for variations in features, size, condition, and amenities, making the comparison more accurate and reliable.
Why the other options are wrong
- A. Limiting comparables to a single brokerage introduces bias and may not provide a full market picture.
- C. Location is a primary factor; properties in different neighborhoods are poor comparables, even if recent.
- D. Quantity over quality is not effective; relevant and similar comparables are key.
Comparable Adjustments (CMA)
The process of modifying the sales prices of recently sold similar properties (comparables) to account for differences when compared to the subject property.
- Always adjust the comparable property, not the subject property.
- Adjustments are made for features like size, age, condition, and amenities.
- If the comparable is superior to the subject, subtract value; if inferior, add value.
Memory trick: CMA is like comparing apples to apples, but first, you have to make sure they're the same size!