New York Real Estate Salesperson ExaminationValuation and Market AnalysisMedium
A seasoned real estate agent is performing a comparative market analysis (CMA) for a seller. The subject property has a newly renovated kitchen, while a comparable sale has an original, outdated kitchen. How should the agent adjust the comparable property's sales price?
- AAdjust the subject property's price instead of the comparable's.
- BMake no adjustment, as kitchen renovations are subjective.
- CDecrease the comparable's price to reflect the superior subject property.
- DIncrease the comparable's price to reflect the superior subject property.
Show answer & explanationAnswer & explanation
Correct answer: D. Increase the comparable's price to reflect the superior subject property.
When using the sales comparison approach or CMA, adjustments are always made to the comparable property, not the subject. If the comparable is inferior to the subject (e.g., has an outdated kitchen compared to a renovated one), its price must be increased to make it equivalent to the subject.
Why the other options are wrong
- A. Adjustments are never made to the subject property in a CMA or appraisal.
- B. Kitchen renovations significantly impact value and require adjustment.
- C. This would incorrectly make the comparable appear even less valuable than the subject.
Adjustments in CMA
Modifications made to the sales price of comparable properties to account for differences between them and the subject property.
- Always adjust the comparable, never the subject.
- If comparable is superior, subtract value; if inferior, add value.
- Purpose is to make comparable similar to subject.
Memory trick: SAS: Subject Always Stays, Adjust Comparables.