Texas Real Estate Sales Agent ExamValuation and Market AnalysisMedium
A buyer's agent is assisting a client with purchasing a home in a rapidly appreciating market. The agent has identified several comparable sales, but all of them closed 3-6 months ago. To provide the most accurate Comparative Market Analysis (CMA), which adjustment would be most crucial for the agent to consider?
- AAdjustments for market conditions (time of sale).
- BAdjustments for differences in square footage.
- CAdjustments for a swimming pool vs. no swimming pool.
- DAdjustments for differences in lot size.
Show answer & explanationAnswer & explanation
Correct answer: A. Adjustments for market conditions (time of sale).
In a rapidly appreciating market, the passage of 3-6 months can significantly impact property values. Adjusting for market conditions (time of sale) is crucial to account for the change in value between the comparable's sale date and the current date of the subject property's valuation, making the comparable's price relevant to the current market.
Why the other options are wrong
- B. Square footage is important, but market conditions are more critical in a 'rapidly appreciating market' over several months.
- C. A swimming pool is a feature adjustment, secondary to market changes over time in this specific scenario.
- D. Lot size is an important adjustment, but market conditions over time are more impactful in the given scenario.
Market Conditions Adjustment
An adjustment made in a CMA or appraisal to account for changes in market values between the sale date of a comparable property and the effective date of the subject property's valuation.
- Crucial in changing markets.
- Accounts for appreciation or depreciation over time.
- Applied to comparable sales prices.
Memory trick: In a 'R'apid 'M'arket, 'T'ime 'M'atters 'M'ost.