Certified Residential Appraiser Practice Exam

What is the correct sequence for property value adjustments?

1. Market Conditions, Financing, Conditions of Sale

2. Conditions of Sale, Property Rights Conveyed, Expenditures

3. Property Rights Conveyed, Financing, Market Conditions

4. Expenditures, Market Conditions, Financing

The correct answer is: Property Rights Conveyed, Financing, Market Conditions

The correct sequence for property value adjustments begins with Property Rights Conveyed, followed by Financing, and finally, Market Conditions. Starting with Property Rights Conveyed, this adjustment focuses on what rights are included or excluded in the sale of a property. For example, if the sale only includes a portion of the property, such as an easement, this will influence the property's value. Next, Financing adjustments address the terms under which the property is bought. This includes any seller financing, interest rates, or assumptions of existing mortgages that might not be typical in the market. These factors can either increase or decrease the property's appeal and, accordingly, its market value. Lastly, Market Conditions adjustments are concerned with the general economic indicators that are affecting property values at the time of sale. Fluctuations in supply and demand, local employment rates, and other market dynamics will influence the final value, but they are assessed after understanding the specific property rights and financing involved in the transaction. This sequence is essential as it reflects a logical progression of considerations that impact property value, from the specific rights attached to the property to the broader market dynamics.