Question 1

Units of comparison are dollar or percentage amounts that are added to, or subtracted from, the comparable sales prices.

Accepted Answer

False

Question 2

A comparable sale should be adjusted for the terms of sale when the sale involves unique financing that offers an advantage to the buyer.

Accepted Answer

Unique financing terms can influence the sale price and create an advantage for the buyer. Therefore, a comparable sale must be adjusted to reflect this difference accurately. Failure to do so could result in an inaccurate valuation and mislead the potential buyers or sellers.

Question 3

If the 1.800 square-foot houses in the subject neighborhood sell typically at $200 per square foot, you would expect that a 1.400 square-foot house would sell for under $200 per square foot.

Accepted Answer

The price per square foot is a rate that typically remains constant regardless of the house size in a specific neighborhood, so a 1,400 square-foot house would also be expected to sell at $200 per square foot, barring any unusual features or conditions.

Question 4

Variable units of comparison can often be effectively analyzed by graphing the sales.

Accepted Answer

Graphing the sales can help to visually compare and analyze the variable units of comparison.

Question 5

To adjust the sales price of a comparable sale with a 10% better location, you should add 10% to the price.

Accepted Answer

Adjusting for a better location typically means that if the comparable sale is in a 10% better location, you would adjust the price of the comparable upwards to reflect the higher value of the better location when comparing it to the subject property. However, the exact percentage and direction of adjustment depend on the context and specifics of the appraisal method being used. The statement oversimplifies the process and assumes a direct and proportional adjustment, which may not always be the case.

Question 6

An example of an economic unit of comparison in the appraisal of land is the price per buildable apartment or dwelling unit.

Accepted Answer

The price per buildable apartment or dwelling unit is commonly used as an economic unit of comparison in the appraisal of land, particularly in development projects or when evaluating the potential profitability of building structures on the property. Other economic units of comparison in land appraisal may include the price per acre, price per square foot, gross rent multiplier, or capitalization rate.

Question 7

Two or more percentage adjustments should theoretically be multiplied together (instead of added) when they are dependent upon each other.

Accepted Answer

When percentage adjustments are dependent on each other, they should be multiplied together to get the cumulative effect. This is known as compounding. For example, if the price of a product is increased by 10%, and then again increased by 5%, the overall increase is not 15%, but rather 10% x 5% = 0.10 x 0.05 = 0.005 or 0.5%. The final price will be 10% + 5% + 0.5% = 15.5%.

Question 8

Using "matched pairs" of comparable sales is considered an indirect method of estimating sales adjustments.

Accepted Answer

Matched pairs analysis is a direct method of estimating sales adjustments in real estate appraisal, where differences in sale prices between similar properties are attributed to different characteristics, directly indicating the value of these characteristics.

Question 9

Sales adjustments should be market-related.

Accepted Answer

Sales adjustments should be market-related in order to ensure that the prices and promotions align with consumer demand and competitive pressures in the marketplace. Making adjustments based solely on internal factors such as inventory levels or production costs may not be effective in driving sales and could result in pricing that is not competitive or appealing to customers.

Question 10

The four elements of comparison used in the sales comparison approach include the terms and time of sale, as well as location and physical elements about the property.

Accepted Answer

The four elements of comparison used in the sales comparison approach are indeed the terms and time of sale, as well as location and physical elements about the property.

Quiz 9: Analyzing and Adjusting Comparable Sales