SAEE Market Approach Application 3 — Questions and Answers
Question 1: Which of the following is an example of a quantitative adjustment in the market approach?
- Adding a dollar amount for an extra bathroom (Correct answer)
- Noting the comparable is in a better school zone
- Describing the neighborhood as desirable
- Stating the property has good curb appeal
Correct answer: Adding a dollar amount for an extra bathroom
Quantitative adjustments assign specific dollar or percentage amounts to differences.
Question 2: The paired sales (matched pairs) technique is used primarily to:
- Isolate the value contribution of a single feature (Correct answer)
- Calculate the cost to build new
- Determine the capitalization rate
- Estimate land value alone
Correct answer: Isolate the value contribution of a single feature
Paired sales analysis compares two otherwise similar sales to measure one differing feature's value.
Question 3: If the subject property is superior to a comparable in a given feature, the appraiser should:
- Add value to the comparable's sale price (Correct answer)
- Subtract value from the comparable's sale price
- Subtract value from the subject
- Make no adjustment
Correct answer: Add value to the comparable's sale price
When the subject is superior, the comparable's price is adjusted upward to match.
Question 4: Which sale condition would require a 'conditions of sale' adjustment?
- A seller under duress accepting a below-market price (Correct answer)
- A typical open-market sale
- A sale at full asking price
- A cash sale at market value
Correct answer: A seller under duress accepting a below-market price
Motivated or distressed sellers create atypical conditions requiring adjustment.
Question 5: In the market approach, the most reliable comparable is generally one that:
- Requires the fewest and smallest adjustments (Correct answer)
- Is the oldest sale available
- Has the highest sale price
- Is located farthest from the subject
Correct answer: Requires the fewest and smallest adjustments
The comparable needing the least adjustment is usually the most reliable indicator.
Question 6: Financing concessions such as a seller paying the buyer's closing costs should be:
- Adjusted to reflect a cash-equivalent price (Correct answer)
- Always ignored in the analysis
- Added to the subject's value
- Treated as physical depreciation
Correct answer: Adjusted to reflect a cash-equivalent price
Concessions can inflate the price, so an adjustment converts it to a cash-equivalent value.
Question 7: When adjustments are expressed as percentages, the appraiser typically applies them to the comparable's:
- Unadjusted sale price (Correct answer)
- Assessed value
- Replacement cost
- Original purchase price
Correct answer: Unadjusted sale price
Percentage adjustments are calculated against the comparable's sale price.
SAEE Market Approach Application 3
Which of the following is an example of a quantitative adjustment in the market approach?