Texas Real Estate Sales Agent ExamValuation and Market AnalysisMedium
A buyer's agent is conducting a CMA for a client interested in purchasing a property. The agent finds a comparable property that sold last month for $350,000. This comparable property has an attached two-car garage, while the subject property has a detached one-car garage. The market value difference for the garage types is estimated at $15,000 in favor of the attached two-car garage. How should the agent adjust the comparable property?
- ANo adjustment is needed, as garage types are subjective.
- BAdd $15,000 to the subject property's value.
- CAdd $15,000 to the comparable's sales price.
- DSubtract $15,000 from the comparable's sales price.
Show answer & explanationAnswer & explanation
Correct answer: D. Subtract $15,000 from the comparable's sales price.
When a comparable property is superior to the subject property in a specific feature, the value of that superior feature is subtracted from the comparable's sales price. In this case, the comparable's attached two-car garage is superior to the subject's detached one-car garage by $15,000, so $15,000 must be subtracted from the comparable's price.
Why the other options are wrong
- A. Garage types represent a measurable difference in utility and value and require adjustment.
- B. Adjustments are always made to the comparable properties, not the subject property.
- C. Adding would imply the comparable is inferior, which is not the case here.
CMA Superior Comp Adjustment
If a comparable property has a feature that is superior to the subject property, the estimated value of that superior feature is subtracted from the comparable's sales price.
- Adjustments are made to comparables.
- Superior feature on comparable means subtract.
- Makes comparable more like the subject.
Memory trick: If the 'C'omparable is 'S'uperior, 'S'ubtract, if 'C'omparable is 'I'nferior, 'I'ncrease.