Humber/Ontario Real Estate Course 3 Exam Practice

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An appraiser is making adjustments using the direct comparison approach. The comparable property has a garage valued at $30,000, while the subject property does not. The subject property has a large bay window valued at $6,400, whereas the comparable does not. What adjustment should the appraiser make?

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

  2. Two adjustments for the comparable property, when added together, would result in a combined minus adjustment of $23,600

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

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

The correct answer is: Two adjustments for the comparable property, when added together, would result in a combined minus adjustment of $23,600

The correct choice is based on the principle that the appraiser needs to ensure that the comparable property is adjusted to reflect the differences between it and the subject property so that a fair comparison can be made. Since the comparable property has a garage valued at $30,000 and the subject property does not have that feature, the appraiser would make a minus adjustment to the comparable property for that amount. This reflects the idea that the comparable property is superior due to the garage, and therefore, its value must be reduced by $30,000 to match the subject property's value. Conversely, the subject property has a large bay window valued at $6,400, which the comparable does not possess. In this case, the appraiser would make a plus adjustment to the comparable property of $6,400. This adjustment is necessary to account for the superior feature of the subject property, thereby increasing the value of the comparable property by $6,400. Adding these two adjustments together results in a total adjustment of $30,000 minus $6,400, leading to a net minus adjustment of $23,600 for the comparable property. This way, the appraiser provides a clearer assessment of the two properties' values by accounting for their differing

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