Applied Methods and Techniques Flashcards

In the sales comparison approach, which adjustment is normally made first in the recommended sequence?

Answer: Property rights conveyed

Transactional adjustments come first, beginning with property rights conveyed, before market conditions, location, and physical adjustments.

A comparable sold for $250,000 and has a garage the subject lacks, worth $15,000 in that market. What is the adjusted price of the comparable?

Answer: $235,000

A feature that makes the comparable better than the subject calls for a downward adjustment to the comparable: $250,000 − $15,000.

A comparable sold 10 months ago for $200,000, and market prices have risen 0.5% per month since then. What is the time-adjusted price using simple (non-compounded) adjustment?

Answer: $210,000

10 months × 0.5% = 5%, and $200,000 × 1.05 = $210,000.

Two sales are identical except one has a swimming pool and sold for $12,000 more. Which technique derived the pool's contribution?

Answer: Paired sales analysis

Paired sales analysis isolates one feature's value by comparing sales that differ only in that feature.

In a multiple regression model, the coefficient for the fireplace variable is $4,800. What does this mean?

Answer: Each fireplace adds about $4,800 in value, with other variables held constant

A regression coefficient estimates the change in value per unit of a variable when all other variables are held constant.

Which sale is most likely to be excluded from a sales comparison or ratio study as a non-arm's-length transaction?

Answer: A sale between a parent and child at a below-market price

Sales between related parties usually don't reflect typical market motivation, so they are not arm's-length.

When valuing small apartment buildings with the sales comparison approach, which unit of comparison is commonly used?

Answer: Price per apartment unit

Apartment properties are often compared on price per unit because buyers think in terms of rentable units.