Certified Residential Appraiser Practice Exam

Which element is NOT commonly used in the sales comparison approach?

1. Expenditures made immediately after purchase

2. Market conditions

3. Property tax assessed value

4. Location

The correct answer is: Property tax assessed value

The sales comparison approach primarily relies on analyzing comparable properties that have recently sold in order to estimate the value of a subject property. This method emphasizes the characteristics and conditions of the properties involved in the transactions. Market conditions are crucial in this approach because they reflect the current demand and supply dynamics, which can affect property values. The location of a property is equally important, as it plays a significant role in determining its desirability and value. Moreover, expenditures made immediately after purchase can influence a buyer’s perception of a property's value and may be factored in when assessing how comparable properties are valued. In contrast, property tax assessed value is typically based on a different set of criteria and does not necessarily reflect the market value established through current sales data. Tax assessments can be influenced by various governmental policies and may not accurately portray what a buyer would pay in a competitive market. This disconnect makes property tax assessed value less relevant in the sales comparison approach, which focuses specifically on actual market transactions and comparable sales data.