Hawaii Pre-Licensing National Practice Exam

When preparing a CMA, how is the adjustment made for a comparable property that is older and has fewer baths compared to the subject property?

1. Increase sale price for age, decrease for baths

2. Decrease sale price for age, increase for baths

3. No adjustment is necessary

4. Increase sale price for both age and baths

The correct answer is: Decrease sale price for age, increase for baths

When preparing a Comparative Market Analysis (CMA), adjustments are made to ensure that the comparable properties align more closely with the subject property in terms of features and conditions that affect value. In this scenario, when the comparable property is older and has fewer baths than the subject property, these differences must be addressed in the adjustments. For an older property, the general real estate principle asserts that newer properties tend to command higher prices due to their modern features, fewer maintenance issues, and overall desirability. Thus, in this case, the sale price of the comparable property should be decreased to account for its age, reflecting the reduced market appeal and potential buyer preference for newer properties. Additionally, having fewer baths than the subject property usually detracts from the comparable's value. Since bathrooms are a significant factor in home valuation, a comparable property with fewer baths should also have its sale price decreased to reflect this deficiency compared to the subject property, which has more amenities. Therefore, for both age and the number of baths, adjustments to decrease the sale price of the older, fewer-bath comparable are necessary, leading to the conclusion that the appropriate action when preparing this CMA would be to decrease the sale price for the age and increase it for the baths—but since the context is