REAL 5080 TEST 2 QUESTIONS & VERIFIED
ANSWERS
The Sales Comparison Approach - Answers - The value of a property can be estimated
based on the selling price of similar properties
Steps in Direct Sales Comparison Approach - Answers - 1. Find transactions involving
property rights and physical characteristics
2. Estimate adjustments
3. Reconciliation - weighting the estimated adjusted vales
Arm's Length Transaction - Answers - buyer and seller have relatively equal bargaining
power so that the sale price is not affected by abnormal pressure or a lack of
competitive negotiation
Dollar Adjustments - Answers - ABSOLUTE - treats all relationships as linear
Percentage Adjustments - Answers - RELATIVE - stated in terms that treats
relationships as non-linear
If the subject is inferior to comparable in a key characteristic, adjust the comparable's
price _________. - Answers - DOWN
If the subject is superior to comparable in a key characteristic, adjust the comparable's
price _________. - Answers - UP
Different ways to weight the adjusted prices - Answers - Equal weights value, squared
value, and absolute value
Methods of estimating adjustments - Answers - 1. Market knowledge
2. Matched Pairs
3. Survey market participants
4. Relative comparison analysis
5. Cost Data Analysis
6. Linear Regression Analysis
7. Adjusting for Financing
Survey Market Analysis - Answers - asking how much extra a buyer would be willing to
pay for the attribute in question
Cost Data Analysis - Answers - value of a component should be approximately equal to
what it would cost to have it added to the structure, less any accrued depreciation
ANSWERS
The Sales Comparison Approach - Answers - The value of a property can be estimated
based on the selling price of similar properties
Steps in Direct Sales Comparison Approach - Answers - 1. Find transactions involving
property rights and physical characteristics
2. Estimate adjustments
3. Reconciliation - weighting the estimated adjusted vales
Arm's Length Transaction - Answers - buyer and seller have relatively equal bargaining
power so that the sale price is not affected by abnormal pressure or a lack of
competitive negotiation
Dollar Adjustments - Answers - ABSOLUTE - treats all relationships as linear
Percentage Adjustments - Answers - RELATIVE - stated in terms that treats
relationships as non-linear
If the subject is inferior to comparable in a key characteristic, adjust the comparable's
price _________. - Answers - DOWN
If the subject is superior to comparable in a key characteristic, adjust the comparable's
price _________. - Answers - UP
Different ways to weight the adjusted prices - Answers - Equal weights value, squared
value, and absolute value
Methods of estimating adjustments - Answers - 1. Market knowledge
2. Matched Pairs
3. Survey market participants
4. Relative comparison analysis
5. Cost Data Analysis
6. Linear Regression Analysis
7. Adjusting for Financing
Survey Market Analysis - Answers - asking how much extra a buyer would be willing to
pay for the attribute in question
Cost Data Analysis - Answers - value of a component should be approximately equal to
what it would cost to have it added to the structure, less any accrued depreciation
