Sales Comparison Approach Flashcards
7 cards from real RAA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Sales Comparison Approach flashcards as text
When making a paired sales analysis to extract an adjustment for a garage, an appraiser finds a property without a garage sold for $280,000 and a nearly identical property with a garage sold for $295,000. What is the indicated adjustment?
Answer: $15,000
The paired sales analysis indicates a $15,000 positive adjustment for the presence of a garage ($295,000 - $280,000).
In the sales comparison approach, what does the term 'arm's length transaction' mean?
Answer: Both buyer and seller acted without undue pressure and with full market knowledge
An arm's length transaction is one where buyer and seller are independent, knowledgeable, and act without compulsion or special relationships.
An appraiser is adjusting for lot size differences. The subject has a 10,000 SF lot; Comparable A has an 8,000 SF lot and sold for $300,000. If the market indicates $2 per SF for lot size, what adjustment is made to Comparable A?
Answer: +$4,000
The comparable has 2,000 fewer SF than the subject, so a positive adjustment of $4,000 (+$2 × 2,000 SF) is added to the comparable.
Which of the following best describes 'elements of comparison' in the sales comparison approach?
Answer: The characteristics used to explain price differences between the subject and comparables
Elements of comparison are the specific characteristics—such as location, condition, and size—used to identify and measure differences between comparable sales and the subject.
A comparable sale is described as a 'distressed sale.' How should an appraiser typically handle this sale?
Answer: Reject it or use it with extreme caution as it may not reflect market value
Distressed sales (foreclosures, short sales) often do not represent arm's length market transactions and should generally be excluded or treated with significant caution.
In the sales comparison approach, what is the purpose of a 'time adjustment' (market conditions adjustment)?
Answer: To reflect changes in market prices between the comparable sale date and the effective appraisal date
A time adjustment corrects for appreciation or depreciation that occurred between the date a comparable sold and the effective date of the appraisal.
An appraiser adjusts Comparable B upward by $8,000 for condition and downward by $3,000 for location. The net adjustment is +$5,000 and the gross adjustment is:
Answer: $11,000
Gross adjustment is the sum of the absolute values of all individual adjustments: $8,000 + $3,000 = $11,000, regardless of their direction.