Section 9: Comparative Market Analyses and Broker Price Opinions

Question 1

CMA

Answer 1

• No charge
• Made by real estate licensee
• Comparable sales method used
• Basic to moderate level of detail
• Prepared for a seller or buyer

Question 2

BPO

Answer 2

• Minimal cost
• Performed by real estate licensee
• Comparable sales method used
• Basic to moderate detail
• Prepared for a lender or RELO company

Question 3

Appraisal

Answer 3

Costs $400+
Performed by state-licensed or certified appraiser
* Multiple methods of performing the appraisal including sales comparison and cost
* Very detailed
* Prepared for the lender, buyer, seller or sometimes courts

Question 4

Economic principal when the smallest property’s value increases it’s surrounded by higher value properties.

Answer 4

Progression

Question 5

Real estate professional just drives by the property, takes photos, then completes paperwork for the lender

Answer 5

Broker Price Opinion

Question 6

The economic principle where too many homes on the market and too few buyers

Answer 6

Competition

Question 7

Economic principle pertains to how a change in a property affects its value as a whole

Answer 7

Contribution

Question 8

Type of analysis that’s a broad estimate of price in case the lender must take over the property and sell it to an investor or the market

Answer 8

Broker’s Price Opinion

Question 9

Economic principle says that a property’s value is determined by what it would cost to purchase a similar property

Answer 9

Substitution

Question 10

What are the national requirements for measuring a home’s square footage?

Answer 10

There are no national requirements.

Question 11

After an appraiser has finished gathering the necessary data from comparables for the subject
property, which element of comparison must be applied first?

Answer 11

Financing

Question 12

When an appraiser is making adjustments to the comparable properties, which adjustment is made
first?

Answer 12

Financing terms and cash equivalency

Question 13

When a comparable property has a feature the subject doesn’t have, what do you do?

Answer 13

Adjust the comparable’s price down

Question 14

The American National Standard Institute calculates a home’s livable square footage or finished area
to include which one of the following areas?

Answer 14

An enclosed area in a house that’s suitable for year-round use.

Question 15

When a subject property has a feature that a comparable property doesn’t have, what should the
licensee preparing a CMA do?

Answer 15

Adjust the comparable’s price up

Question 16

Livable square footage, or finished area, is defined by American National Standards Institute

Answer 16

• Enclosed areas
• Areas suitable for year-round use
• Areas containing walls, floors, ceiling similar to rest of the house
• areas accessible from the rest of the living area
• Ceilings must be at least 7’ high

Spaces lacking stairs or direct access aren’t counted

Question 17

Land doesn’t cease to exist and not depreciated. It isn’t covered by property insurance because it

Answer 17

indestructability

Question 18

When market conditions indicate top-of-the-market pricing, is it in your client’s best nterest to price it there?

Answer 18

No, because it still has to appraise.

Question 19

What is the CMA “rule of 3”

Answer 19

3 comparables (ideally sold in the past 3 months)

Question 20

When a comparable property has a feature that the subject property doesn’t have, what should the
licensee preparing a CMA do?

Answer 20

Adjust the comparable’s price down