CGA Sales Comparison Approach

Question 1

What is the primary goal of the sales comparison approach in real estate appraisal?

Accepted Answer

To estimate the property's value based on comparable sales.

Answer

To calculate the replacement cost of the property.

Answer

To assess the income potential of the property.

Answer

To determine the depreciation of the property.

Question 2

Which of the following is considered a comparable sale in the sales comparison approach?

Accepted Answer

A property with a similar location, size, and condition to the subject property.

Answer

A property located in a different city.

Answer

A property with a completely different use type.

Answer

A property with significant wear and tear.

Question 3

What is the role of adjustments in the sales comparison approach?

Accepted Answer

To account for variations in location, size, and condition.

Answer

To calculate the depreciation of the properties.

Answer

To determine the property’s income potential.

Answer

To assess the tax implications of the property.

Question 4

What factors should be considered when selecting comparable properties in the sales comparison approach?

Accepted Answer

Location, size, condition, and recent sale prices of similar properties.

Answer

Only the location of the property.

Answer

Only the square footage of the property.

Answer

Only the year the property was built.

Question 5

What is a major limitation of the sales comparison approach?

Accepted Answer

It is ineffective when there are few comparable sales.

Answer

It only works for newly constructed properties.

Answer

It cannot be used in residential appraisals.

Answer

It doesn't account for market trends.

Question 6

What is a typical adjustment made in the sales comparison approach?

Accepted Answer

Adjusting for differences in location, size, and condition of the property.

Answer

Adjusting for differences in rent potential.

Answer

Adjusting for property tax rates.

Answer

Adjusting for the property's color and design.

Question 7

Which type of market conditions is most likely to affect the use of the sales comparison approach?

Accepted Answer

Stable, balanced markets.

Answer

Highly fluctuating or volatile markets.

Answer

Saturated markets with too many similar properties.

Answer

Markets with consistent rental income.

Question 8

What is the purpose of using comparable sales data in the sales comparison approach?

Accepted Answer

To estimate the value of the subject property by comparing it to recently sold similar properties.

Answer

To determine the cost to replace the property.

Answer

To adjust for physical wear and tear of the property.

Answer

To calculate the depreciation of the property.

Question 9

Which of the following would NOT typically require an adjustment in the sales comparison approach?

Accepted Answer

Differences in the color of the property.

Answer

Differences in the age of the property.

Answer

Differences in the size of the property.

Answer

Differences in the type of construction.