Hawaii Pre-Licensing National Practice Exam

In a competitive market analysis, what should be adjusted for a comparable property that is newer and has fewer baths than the subject property?

1. Sale price of the comparable property down for age

2. Sale price of the comparable property up for age

3. Sale price of the comparable property down for the number of baths

4. Sale price of the comparable property down for age and up for the number of baths

The correct answer is: Sale price of the comparable property down for age and up for the number of baths

In a competitive market analysis, adjustments are made to comparable properties to ensure they reflect the value of the subject property accurately, taking into account differences in features and characteristics. When a comparable property is newer than the subject property, the adjustment generally involves considering the age difference and how that impacts market value. In this case, the sale price of the comparable property would be adjusted up for its newer condition because newer properties typically command higher prices due to reduced maintenance needs and modern features. Additionally, for the feature of fewer baths, the comparable property would have its sale price adjusted downward. Having fewer baths can negatively affect the property's functionality and desirability, particularly if the subject property offers more bathrooms, which many buyers might prefer. Therefore, by adjusting the sale price of the comparable property down for its fewer baths and up for its newer age, we arrive at the correct adjustment method. This comprehensive approach accounts for both the positive value associated with the newer property and the negative value due to fewer bathrooms, resulting in a balanced valuation that accurately reflects differences between the two properties.