Market Analysis & Valuation Flashcards
7 cards from real CGA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Market Analysis & Valuation flashcards as text
In a market analysis, which condition must be present for a sale to qualify as an arm's-length transaction?
Answer: Both parties act in their own best interests without undue pressure
An arm's-length transaction requires both parties to be independent, knowledgeable, and acting in their own best interests without compulsion.
Which adjustment in the sales comparison approach compensates for a comparable property having a superior feature compared to the subject?
Answer: A negative adjustment to the comparable
When a comparable is superior to the subject, a negative adjustment is made to the comparable's sale price to reflect what it would have sold for without that superior feature.
The principle of substitution states that a rational buyer will pay no more for a property than:
Answer: The cost to acquire an equally desirable substitute
The substitution principle holds that a buyer will not pay more for a property than the cost of acquiring an equally desirable alternative in the marketplace.
When analyzing market conditions over time, a paired sales analysis is BEST used to isolate:
Answer: Time adjustments reflecting market appreciation or depreciation
Paired sales analysis compares sales of the same or very similar properties at different points in time to isolate and quantify market condition (time) adjustments.
In a residential market analysis, 'effective demand' differs from 'potential demand' in that effective demand requires:
Answer: Both the desire and the financial ability to purchase
Effective demand combines purchasing desire with financial ability, distinguishing actual market participants from those who merely want but cannot afford the property.
A property sells for $450,000. After research, the appraiser determines the transaction involved seller-paid points worth $9,000. What is the most likely cash-equivalent sale price?
Answer: $441,000
Seller concessions inflate the nominal sale price, so the cash-equivalent price is $450,000 − $9,000 = $441,000 to reflect what a buyer would have paid without the concession.
Which market area delineation concept refers to the geographic area from which a subject property draws the majority of its competing supply and demand?
Answer: Subject market area (SMA)
The Subject Market Area (SMA) is the specific geographic zone identified by the appraiser where competing properties and likely buyers are concentrated.