Texas Real Estate Sales Agent ExamValuation and Market AnalysisEasy
A real estate agent is preparing a Comparative Market Analysis (CMA) for a client. When comparing the subject property to a recently sold comparable property, the comparable has a significantly larger, newly renovated kitchen compared to the subject. How should the agent adjust for this difference?
- ADecrease the value of the subject property.
- BDecrease the sales price of the comparable property.
- CIncrease the value of the subject property.
- DIncrease the sales price of the comparable property.
Show answer & explanationAnswer & explanation
Correct answer: B. Decrease the sales price of the comparable property.
When performing a CMA, adjustments are always made to the comparable properties, not the subject property. Since the comparable property has a superior feature (larger, renovated kitchen), its sales price must be decreased to reflect what it would have sold for if it had a kitchen similar to the subject property.
Why the other options are wrong
- A. Adjustments are made to comparable properties, not the subject property.
- C. Adjustments are made to comparable properties, not the subject property.
- D. Increasing the comparable's price would imply the subject is superior, which is incorrect in this scenario.
CMA Adjustment Principle (Superior Comp)
When a comparable property has a feature superior to the subject property, the sales price of the comparable property is adjusted downwards to make it equivalent to the subject.
- Adjustments are always made to the comparable property, never the subject.
- If comparable is superior, subtract value from comparable's sales price.
- If comparable is inferior, add value to comparable's sales price.
Memory trick: Comparables get the corrections, never the subject's connections.