North Carolina Real Estate Broker Exam — All Questions
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An appraiser adjusts comparable sales when using the sales comparison approach. To which property is the adjustment always applied?
- a.The comparable, never the subject property✓
- b.The subject property, never the comparable
- c.Whichever property has the higher value
- d.Both properties equally
In the sales comparison approach the subject has no known sale price, so adjustments are made to the comparables to make them resemble the subject. If a comparable is superior, its price is adjusted downward; if inferior, upward. The subject is never adjusted because its value is the unknown the appraiser is trying to estimate.
Which appraisal approach is generally given the most weight when valuing a single-family owner-occupied home?
- a.Income capitalization approach
- b.Cost approach using replacement cost
- c.Gross rent multiplier approach
- d.Sales comparison approach✓
For owner-occupied homes, buyers act on prices of similar recently sold homes, so the sales comparison approach best reflects market behavior and is weighted most heavily. The income and gross rent multiplier approaches suit rental or investment property because they rely on income the home does not generate. The cost approach is most useful for new construction or special-purpose buildings that lack comparable sales.