Question

Given the following information, what adjustment would need to be made to account for the living area difference between the subject property an comparable property? Adjustments Market conditions -0.50% (per month) Lot size $25,000 (per acre) Effective age (years) $1,000 (per year) Living area (sq. ft) $45.00 (per sq. ft.) Bath $1,250 (per bath) Bedrooms $3.000 (per bedroom) Subject Property Today 0.83 Time sold Lot size (acres) Effective age (years) Living area (sq. ft) 18 Comparable Property 4 months ago 0.80 17 2.383 3.5 4 $287.000 Bath 2.197 3.5 14 Bedrooms Sale price The price of the comparable property must be adjusted upward by 58,370. The price of the subject property must be adjusted downward by $8,370 O The price of the comparable property must be adjusted downward by $8,370. The price of the subject property must be adjusted upward by 58,370.

Answer 1

Ans:

the components into which a property may be divided for purposes of comparison e.g. price per square metre, frontage, cubic metres, room, bed, seat, apartment unit. These units usually facilitate analysis even when the properties are not very comparable.

Correct answer is - The price of the comparable property must be adjusted downward by $8370

Explanation:

Difference in living area (Sq ft) =(Comaparable-Subject) 2.383-2.197= 0.186

Rate per sq ft of living area = $45

Difference in year = 8-7= 1 year

Effective age (per year) = $1000

Amount to be adjusted = $45 * 0.186 * 1 year * $1000 = $8370

Value of Comparable property is more by $8370 therefore, it needs to be adjusted downward to make it comparable with subject property.