Part 15 Flashcards
Sale comparison approach
Which of the following economic principles affirms that the value of a property tends to be set by the price that would be paid to acquire a substitute property of similar utility and desirability?
substitution
The sales comparison approach is based primarily on the principle of substitution.
Which of the following statements best define “units of comparison?”
All of the listed choices are correct.
Some units of comparison can be adjusted, but those from the income approach should not be adjusted. | They facilitate the analysis of comparability between sales and the subject property. | The units selected depend on the appraisal problem and the nature of the problem.
What are units of comparison?
rates used to compare properties that are difficult to estimate
When should an appraiser be reluctant to use the sales comparison approach?
when there is insufficient data
The main limitation of the sales comparison approach is its dependence on data. When there is insufficient data, the sales comparison approach will have less reliability. Rapidly changing economic conditions or governmental legislation may also limit the reliability of this approach.
You are analyzing a sale in which the mathematical calculation of cash equivalency calls for a $10,000 downward adjustment. However, by use of several paired data sets, you find that the market only recognizes a $4,000 downward adjustment. What is the adjustment for financing?
$4,000
The adjustment of $4,000 reflects the actions of buyers and sellers, and is perhaps a better indication of value for the difference in financing terms than a mathematical calculation.
Which of the following properties would likely require a search that extends beyond the state it is located in for comparable sales?
super-regional shopping mall
These types of malls have a market that often goes beyond the state in which they are located.
Though they may all be useful, which of the following sources would provide the least reliable data to apply to the sales comparison approach?
expired listings
All comparable sales data is helpful to the appraiser, but from a priority standpoint, expired sales provide a less reliable indicator of value than the other sources.
What do adjustments for financing terms compensate for?
I got this question wrong on the quiz
A comparable that sold with financing terms that were different than the terms defined in the appraisal report.
For which of the following reasons, a market conditions adjustment is applied in some situations?
The market has changed since the comparable property sold.
An adjustment for market conditions is sometimes referred to as a “time adjustment.” In reality, it is not time that requires the adjustment, but the changes in the market during the passage of time.
Which of the following is used for conditions of sale adjustments?
the motivations of buyers and sellers
The conditions of sales adjustment adjust for any undue duress or compulsion to act on the part of either the buyer or seller.
Which of the following statements best describes the sales comparison approach?
a set of procedures based on the comparison of similar properties that have sold recently
a set of procedures based on the comparison of similar properties that have sold recently
