Humber/Ontario Real Estate Course 4 Exam Practice

An appraiser is making adjustments using the direct comparison approach. The comparable property has a garage valued at $30,000 and the subject property does not have a garage. The subject property has a large bay window valued at $6,400 and the comparable does not. What adjustment would be made?

1. A minus adjustment to the comparable property for $28,000 along with a plus adjustment for $7,000.

2. A minus adjustment of $23,600 in total to the comparable property.

3. A minus adjustment of $30,000 and a plus adjustment of $6,400 to the comparable property.

4. A plus adjustment to the subject property for the cost difference of the elements.

5. Two minus adjustments of $30,000 and $6,400 to the subject property.

6. Two minus adjustments of $30,000 and $6,400 to the comparable property.

The correct answer is: A minus adjustment of $23,600 in total to the comparable property.

In the direct comparison approach, appraisers adjust comparable properties to reflect differences in features and enhancements relative to the subject property. This adjustment process helps create a more accurate basis for comparison by taking into account the features that add value. For the scenario presented, the comparable property includes a garage valued at $30,000, which the subject property lacks; therefore, a negative adjustment needs to be made to the value of the comparable property, as it carries a feature (the garage) that the subject property does not have. Simultaneously, the subject property has a bay window valued at $6,400, which is not present in the comparable property. Therefore, a positive adjustment is made to account for the value that the subject property possesses over the comparable. To find the total adjustment made to the comparable property, one would subtract the value of the garage from the comparable and add the value of the bay window from the subject. Thus: - The adjustment for the garage results in a minus $30,000. - The adjustment for the bay window results in a plus $6,400. Calculating these adjustments results in: - Total adjustment = Minus $30,000 + Plus $6,400 = Minus $23,600. Thus, the