Humber/Ontario Real Estate Course 3 Exam Practice

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When making time adjustments for three properties sold at different times, which adjustment should be made if the market rate has been improving steadily?

Minus adjustments to the sale prices to allow for market changes over time.
Plus adjustments of 1%, 3%, and 5% respectively to the three listing prices for those comparable properties.
An appropriate plus adjustment to each of the comparables, based on the time period since point of sale.
A plus adjustment of $6,000 to the property that sold three months ago, assuming that it sold for $300,000.
Exclude the properties from comparison due to differing sales times.
Make no time adjustments if all properties sold within the same quarter.

The correct answer is: An appropriate plus adjustment to each of the comparables, based on the time period since point of sale.

Making appropriate time adjustments during a comparative market analysis is crucial, especially when the market has been experiencing an upward trend. The correct approach is to apply a plus adjustment to each comparable property based on the elapsed timeframe since their respective sales. This acknowledges that properties sold earlier in a rising market would likely have lower values compared to what would be expected if sold more recently, hence an upward adjustment is warranted. This method utilizes relevant data from the current market conditions to reflect the true value of the properties. It takes into account how much the market has appreciated since the last sales, allowing for a fairer comparison with the subject property. Adjustments based on specific percentages or fixed amounts, as implied in other choices, do not consider the exact changes in the market over the timeframe of the sales, which is essential for accuracy. Relying on fixed values like the proposed $6,000 adjustment or excluding properties entirely discounts the nuances of market movements and comparative analysis. Likewise, asserting that no adjustments are needed if sales occurred within the same quarter could overlook individual circumstances of each transaction. By opting for the appropriate plus adjustment for each comparable, you ensure that the analysis reflects the most accurate representation of value in an improving market.