Humber/Ontario Real Estate Course 4 Exam Practice

Salesperson Gill is adjusting a comparable property valued at $30,000 with a garage for a property without one. What adjustment is made?

1. Minus adjustment of $28,000 to the comparable property

2. Minus adjustment of $28,000 to the subject property

3. Minus adjustment of $30,000 to the comparable property

4. Minus adjustment of $30,000 to the subject property

5. Plus adjustment of $28,000 to the comparable property

6. Plus adjustment of $30,000 to the comparable property

The correct answer is: Minus adjustment of $28,000 to the comparable property

When making adjustments in the sales comparison approach to valuation, it is important to differentiate between the comparable property and the subject property. In this case, Salesperson Gill is comparing a property valued at $30,000 that includes a garage to a property that does not have a garage. Since the comparable property has a feature (the garage) that the subject property lacks, the value of that feature needs to be adjusted downward from the value of the comparable property to accurately reflect the value of the subject property. A minus adjustment of $30,000 would suggest that the garage is considered to add that much value to the comparable property. Therefore, adjusting the comparable property’s value downwards by that amount allows for a fair comparison. By making this adjustment, the assessed value of the comparable property aligns more closely with the subject property, offering a more accurate basis for comparison. This adjustment process is a crucial component of real estate valuation, as it helps establish a more accurate market value for the subject property based on similar properties with differing features. Adjustments are always made to the comparable property when it has superior features compared to the subject property.