Humber/Ontario Real Estate Course 3 Exam Practice

When using the direct comparison approach, how should a salesperson adjust for a garage valued at $30,000 that the subject property lacks?

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 subject property

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

The correct approach when using the direct comparison method, particularly regarding adjustments for different features between properties, is to adjust the comparable property rather than the subject property. In this scenario, since the subject property lacks a garage valued at $30,000, the comparable property should be adjusted downward to reflect this deficiency. Thus, making a minus adjustment of $30,000 to the comparable property accounts for the added value that the garage provides. This adjustment ensures that both properties can be accurately compared on a like-for-like basis, allowing a clearer assessment of market value. By reducing the value of the comparable property, the adjustments reflect the true market conditions and characteristics of the subject property. In this case, adjusting the comparables highlights the value difference accurately, aligning with the concept that a missing feature in the subject property lowers its value relative to comparable properties that include it. The option selected correctly demonstrates this principle of adjustment in real estate valuation.