Michigan Real Estate Salesperson Exam — All Questions
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An appraiser valuing a single-family home relies primarily on recent sales of similar nearby homes, adjusting for differences. Which approach is being used?
- a.Sales comparison approach✓
- b.Cost approach
- c.Income approach
- d.Gross rent multiplier approach
The sales comparison approach estimates value by comparing the subject to recently sold similar properties and adjusting for differences. It is the primary method for residential property. The cost and income approaches are used more for new construction and investment property.
A licensee prepares a comparative market analysis (CMA) to help a seller set a listing price. How does a CMA differ from a formal appraisal?
- a.A CMA is legally binding on the buyer
- b.A CMA can only be prepared by a licensed appraiser
- c.A CMA must use the cost approach
- d.A CMA is an informal opinion of value by a licensee, not a certified appraisal✓
A CMA is an opinion of likely selling price based on comparable listings and sales, prepared by a real estate licensee to guide pricing. It is not an appraisal, which must be performed by a licensed or certified appraiser following USPAP.