Humber/Ontario Real Estate Course 3 Exam Practice

Appraiser Helen is assessing a lot with a certain frontage. A comparable lot with a larger frontage sold recently. What adjustment is needed based on $7,350 per front foot?

1. A:A plus adjustment of $29,400

2. B:A minus adjustment of $36,750

3. C:A plus adjustment of $7,350

4. D:A minus adjustment of $29,400

5. E:A neutral adjustment

6. F:A minus adjustment of $19,250

The correct answer is: B:A minus adjustment of $36,750

When assessing the value of a property, appraisers often make adjustments based on comparable sales to establish a fair market value. In this scenario, Helen is evaluating a lot with particular frontage, while a comparable lot with a larger frontage has been sold recently. To make the necessary adjustments, it's crucial to calculate the difference in frontage between the subject lot and the comparable lot. If the comparable lot has a larger frontage, the adjustment must account for the value associated with that additional frontage. Given that the value per front foot is $7,350, the appraiser would multiply the difference in front foot by this amount to determine the total adjustment required. For example, if the comparable lot had 5 more front feet than the subject property, the calculation would be 5 front feet multiplied by $7,350 per front foot, which equals $36,750. This amount represents the excess value due to the larger frontage, necessitating a minus adjustment to the comparable lot's value since the subject lot being assessed is less valuable due to its smaller size. Therefore, a minus adjustment of $36,750 indicates that the comparable lot's sale price is reduced by this amount to reflect the lower value of the subject lot, leading to a proper market valuation.