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 subject property. The subject property has a two-car garage. A comparable property, which recently sold for $350,000, has only a one-car garage. The market value difference for a two-car garage versus a one-car garage is estimated to be $10,000. How should the sales associate adjust the comparable property's sales price?
- ADecrease the comparable's price by $10,000
- BNo adjustment is needed as garages are not typically factored in a CMA
- CIncrease the comparable's price by $10,000
- DIncrease the comparable's price by $5,000
Show answer & explanationAnswer & explanation
Correct answer: C. Increase the comparable's price by $10,000
When using the sales comparison approach, adjustments are made to the comparable properties, not the subject. If the comparable is inferior to the subject (e.g., has fewer features), its price is adjusted upward to reflect what it would have sold for if it had the subject's features. Conversely, if the comparable is superior, its price is adjusted downward.
Why the other options are wrong
- A. This would be incorrect; the comparable is inferior to the subject regarding the garage, so its price should be adjusted upward.
- B. Incorrect. Garages, especially the number of bays, are a significant feature that influences property value and must be included in a CMA.
- D. Incorrect. The full market value difference for the feature should be applied, not a partial amount.
Comparable Property Adjustment (CMA)
In a Comparative Market Analysis (CMA), adjustments are made to the sales prices of comparable properties to account for differences between them and the subject property.
- Adjustments are always made to the comparable property, never the subject property.
- If a comparable property is superior to the subject in a feature, its price is adjusted downward.
- If a comparable property is inferior to the subject in a feature, its price is adjusted upward.
Memory trick: Comparable is Inferior, Adjust Up; Comparable is Superior, Adjust Down.