NAR Market Research & Competitive Analysis 3 — Questions and Answers
Question 1: A real estate agent wants to assess supply-and-demand conditions for condos in a downtown market. Which two data points are most critical?
- Average list price and number of expired listings
- Months of inventory and year-over-year closed sales volume (Correct answer)
- Walk score and school ratings
- Gross rent multiplier and cap rate
Correct answer: Months of inventory and year-over-year closed sales volume
Months of inventory combined with year-over-year sales volume directly reflects the balance between supply and demand.
Question 2: Which type of market research focuses on why buyers chose or rejected a specific property, gathered through interviews or surveys?
- Quantitative research
- Secondary research
- Qualitative research (Correct answer)
- Regression analysis
Correct answer: Qualitative research
Qualitative research captures motivations, opinions, and perceptions through methods like interviews and focus groups.
Question 3: An agent is evaluating competition for a new listing. Which factor makes a competing active listing a stronger threat?
- It is priced higher than the subject property
- It has been on the market for 120+ days
- It is in the same school district, similar size, and priced 3% below the subject (Correct answer)
- It is a foreclosure property
Correct answer: It is in the same school district, similar size, and priced 3% below the subject
A nearby, similarly sized listing in the same school district priced below the subject is the most direct competitive threat.
Question 4: What is the primary purpose of tracking expired and withdrawn listings in a market analysis?
- To identify overpriced properties and determine realistic market price ceilings (Correct answer)
- To find motivated sellers willing to negotiate
- To track agents with poor marketing skills
- To calculate average commission rates
Correct answer: To identify overpriced properties and determine realistic market price ceilings
Expired and withdrawn listings reveal price points the market rejected, helping agents establish realistic pricing boundaries.
Question 5: A buyer's agent researches a neighborhood and finds that 40% of sales in the past year were distressed (foreclosures/short sales). How should this affect a CMA for a traditional sale?
- Distressed sales should be used equally with traditional sales
- Distressed sales should be weighted higher due to volume
- Distressed sales should be excluded or adjusted, as they don't reflect arm's-length market value (Correct answer)
- Distressed sales are not recorded in the MLS
Correct answer: Distressed sales should be excluded or adjusted, as they don't reflect arm's-length market value
Distressed sales often sell below market value due to condition or seller duress and should be excluded or adjusted when assessing arm's-length market value.
Question 6: Which statistic represents the middle value of all home prices sold in a market over a given period?
- Mean average sale price
- Mode sale price
- Median sale price (Correct answer)
- Weighted average sale price
Correct answer: Median sale price
The median sale price is the midpoint where half of homes sold above and half below, making it less skewed by outliers than the mean.
Question 7: A Realtor identifies that a comparable sale included seller-paid closing costs of $8,000. How should this be handled in a CMA?
- Ignore it since it doesn't affect the sale price
- Add $8,000 to the comparable's sale price to reflect true market value
- Subtract $8,000 from the comparable's sale price as a concession adjustment (Correct answer)
- Report it to the state licensing board
Correct answer: Subtract $8,000 from the comparable's sale price as a concession adjustment
Seller-paid concessions effectively reduce the net price received, so the comparable's price is adjusted downward by the concession amount.
NAR Market Research & Competitive Analysis 3
A real estate agent wants to assess supply-and-demand conditions for condos in a downtown market.
Which two data points are most critical?