The seller's home is a 3-bedroom, 2 bath ranch with a 1-car garage and a fireplace. A comparable recently sold property (Comp 1) is also a 3-bedroom ranch with 1 and 1/2 baths which does not have a fireplace, but it does have a 2-car garage. The broker who is preparing a CMA has determined that a half bath is worth $2,500, fireplaces are worth $1,500 and garage spaces are worth $6,500 each. The broker would

Rationale

The broker would add $10,500 to Comp 1.

To adjust the value of Comp 1 to match the seller's home, the broker must account for the differences in features. Specifically, the seller's home has a full bath, a fireplace, and a one-car garage, while Comp 1 has a half bath, no fireplace, and a two-car garage. The total adjustment reflects the value of these features.

A (subtract $10,500 from Comp 1.) YOUR ANSWER

Subtracting $10,500 would incorrectly imply that Comp 1 is superior to the seller's home, which is not the case. The seller's home has more valuable features, and thus the value should be adjusted upwards to reflect its additional amenities rather than downwards.

B (subtract $2,500 from Comp 1.) YOUR ANSWER

This option only considers the value of the half bath, which is worth $2,500. However, it fails to account for the fireplace and the difference in garage space, leading to an inadequate adjustment that does not accurately represent the comparative values.

C (add $10,500 to Comp 1.) CORRECT

This is the correct approach, as it includes the value adjustments for the half bath ($2,500), the fireplace ($1,500), and the garage difference. The seller’s home has one less garage space than Comp 1, which translates to a deduction of $6,500 for the two-car garage, leading to a total adjustment of $10,500 ($2,500 + $1,500 + $6,500).

D (add $2,500 to Comp 1.) YOUR ANSWER

Adding only $2,500 would only adjust for the half bath difference, ignoring the additional value provided by the fireplace and the garage space. This insufficient adjustment does not reflect the total comparative value of the seller's home.

Conclusion

To accurately compare the seller's home with Comp 1, the broker must consider all the differences in features and their respective values. By adding $10,500 to Comp 1, the broker ensures that all relevant features—bathrooms, fireplaces, and garage spaces—are accounted for, providing a fair and accurate comparative market analysis. This thorough adjustment helps in determining a realistic selling price for the seller's property.

The broker would add $10,500 to Comp 1.

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