Humber/Ontario Real Estate Course 3 Exam Practice

When using the direct comparison approach to estimate the market value of a property, if the comparable property has a swimming pool valued at $18,000 and the subject property does not, what adjustment should be made?

1. The salesperson should make an adjustment based on the cost to construct the pool.

2. The salesperson should not make any adjustment at all.

3. The salesperson should make an adjustment based on the current value of the pool, not the construction cost.

4. The salesperson should adjust based on the difference between the cost and the current value.

5. An adjustment must be made based on the homeowner's preference for a pool.

6. Use the market sentiment regarding pools for adjustment.

The correct answer is: The salesperson should make an adjustment based on the cost to construct the pool.

When using the direct comparison approach to estimate the market value of a property, the salesperson should make an adjustment based on the cost to construct the pool. This is because the direct comparison approach involves finding similar properties and making adjustments for any differences. In this scenario, the swimming pool is a difference between the comparable property and the subject property. Since the pool has a value of $18,000, the salesperson should make an adjustment based on the cost to construct the pool, as this would give a more accurate estimate of the market value. Options B, C, D, E, and F are incorrect because they do not take into account the actual cost of the pool, which is an important factor in the direct comparison approach.