NAR Market Research & Competitive Analysis 2 — Questions and Answers
Question 1: A seller asks why their home is priced 8% below the neighborhood average. Which CMA adjustment principle best explains this?
- Regression toward the mean
- Dollar adjustments for inferior features relative to comparables (Correct answer)
- Assessed value correlation
- Zillow Zestimate variance tolerance
Correct answer: Dollar adjustments for inferior features relative to comparables
CMA pricing uses dollar adjustments to account for feature differences between a subject property and its comparables.
Question 2: Which metric best indicates whether a local market is shifting from a seller's market to a buyer's market?
- Rising median days on market combined with increasing active inventory (Correct answer)
- Falling mortgage rates
- Increasing list-price-to-sale-price ratios
- Rising per-square-foot prices
Correct answer: Rising median days on market combined with increasing active inventory
Rising days on market and swelling inventory signal reduced demand and a shift toward buyer-favorable conditions.
Question 3: An agent compiles a competitive market analysis and finds that all recent sales within 0.5 miles are over 18 months old. What is the most appropriate next step?
- Use the older sales as primary comps without adjustment
- Expand the search radius or time range to find more recent comparable sales (Correct answer)
- Price based on active listings only
- Rely solely on automated valuation models
Correct answer: Expand the search radius or time range to find more recent comparable sales
When recent sales are unavailable in the immediate area, expanding the geographic or time parameters yields more reliable comparable data.
Question 4: What does absorption rate measure in real estate market research?
- The percentage of listing price recovered at closing
- The rate at which available homes are sold in a given time period (Correct answer)
- Lender loan-to-value ratios in a market
- The ratio of appraised value to assessed value
Correct answer: The rate at which available homes are sold in a given time period
Absorption rate measures how quickly available inventory is sold, typically expressed as months of supply.
Question 5: A Realtor notices that the list-to-sale price ratio in a zip code has dropped from 101% to 97% over six months. What does this most likely indicate?
- Sellers are pricing more aggressively above market
- Buyer negotiating power has increased (Correct answer)
- Mortgage rates have decreased
- Appraisals are coming in above list price
Correct answer: Buyer negotiating power has increased
A falling list-to-sale ratio means buyers are successfully negotiating prices below list, reflecting increased buyer leverage.
Question 6: Which data source provides the most reliable closed-sale price data for completing a CMA in the U.S.?
- Zillow public estimates
- County recorder or assessor public records
- MLS sold data (Correct answer)
- Newspaper real estate listings
Correct answer: MLS sold data
MLS sold data is the most accurate and timely source for verified closed-sale prices used in CMA preparation.
Question 7: When performing a competitive market analysis, which adjustment would be made to a comparable that has a swimming pool when the subject property does not?
- Add value to the subject property
- Subtract value from the comparable (Correct answer)
- No adjustment is needed for pools
- Add value to the comparable
Correct answer: Subtract value from the comparable
When a comparable has a superior feature the subject lacks, its price is adjusted downward to reflect that difference.
NAR Market Research & Competitive Analysis 2
A seller asks why their home is priced 8% below the neighborhood average.
Which CMA adjustment principle best explains this?