Sales comparison approach

1. What is the correct adjustment to be made to the value of an 1800 square foot comparable
property which sold in an areas where living areas is valued at birr 110 per square foot if it is
being compared to the a subject property which is 1700 square feet?

Answer negative adjustment

2. What is the correct adjustment to be made to a recently sold comparable property that has 3
baths if the subject property has 2.5 baths and properties in the areas demonstrate that buyers
are willing to pay birr 8,000 for a full bath and birr 5,500 for a half bath?

Sub comp Adjustment

Full BA 2 3 -8,000
Half 1 0 -5,500
-2,500
3. What is the indicate probable selling price of a 1900 square foot subject property if a recently
sold comparable home sold for birr 175,000 and had 2000 sq ft of living area in a neighborhood
where living area is valued at birr 105 per square foot?

4. The subject property of a CMA has a lot that is birr 5000 better than the lot of a recently sold
comparable property, what would be the appropriate adjustment to make in this CMA. Is the
adjustment made to the comparable property’s sales price or to the subject property?
5. What is the indicated value (probable sales price) of 123 Main Street which has 2300 square
feet, 2.5 baths, and a 2 car garage if it is compared with 989 Mao Drive which is 2300 square
feet, 3 baths and a 2 car garage and sold for birr 320,000 in an area where square footage is
valued at birr 140 per square foot , a full bath is valued at birr 9,000 a half bath is valued at birr
5,000 and a two car garage is worth birr 12,000

Subject comp 320000

Size 2300 2300 No
Full Bath 2 3 -9000
Half Bath 1 0 +5000
2 garage Yes Yes no
1 garage no No no

6. A comparable property is 125 square feet smaller than the subject. At birr 40 per square foot,
what adjustment should be made?

125*40 up

7. A prospective reporting entity for the sake of IFRS has asked you to help it estimate as
reasonable value for its property. Properties in the local market are appreciating at rate of 2
percent per year. Using the sales comparison approach to value and using just one comparable
properly that sold for birr 187,200 seven months ago, what adjustment should you make to
account for appreciation in value?
8. In estimating the market value of a residence by the sales comparison approach, the appraiser
verified the birr 700,000 sale price of a comparable residence are estimated that prices for
similar residence had increased by 2 percent since the date of sales of the comparable
residence. After comparing features of the comparable and subject residences the appraiser
made adjustments for fours factors as follows
a. location subject better by birr 10,000
b. Site features subject better by birr 5,000
c. Size of house comparable better by birr 16,000
d. Condition comparable better by birr 8,000

Compute the value of the subject residence accordingly

9. The subject house of an appraisal has 1950 square feet. A highly similar comparable house in the
same neighborhood has 2100 square feet and recently sold for a total sales price that included
birr 900 per square foot of living areas plus birr 30,000 for the lot. The subject lot is worth birr
4000 more than the comparable lot and the subject has a deck worth birr 3,000 that the
comparable does not have. Based only on these factors, what is the indicated value of the
subject?
10. A licensee is preparing a comparative market analysis (CMA) in connection with listing a house
for sale. The two story house is 7 years old, 2450 square feet of living area, 3 bed rooms, 2
bathrooms, 1 car attached garage, bonus room over garage, and recent kitchen and bath
upgrades valued at birr 20,000. The licensee finds in the same neighborhood a very similar two-
story house that sold 6 months ago for birr 253,000. That house is 8 years old and has 2600
square feet of living area. 3 bedrooms, 2 ½ baths, 2 car attached garage and no significant
upgrades. Current construction cost in the area for similar houses are birr 110 per square foot,
birr 10,000 for a 1 car garage, and birr 15,000 for a 2 car garage. Price appreciation in the area
has been about 5 percent during the past year. Based on this one comparable, what is the best
estimate of market value for the house being listed (rounded to the nearest thousand dollars)

Particular Subject Comparable

Square feet (living area) cost of 2400 2600
current construction birr 110
per square foot
Bed rooms 3 3
Bathrooms 2 2½
Garage 1 2
Recent kitchen and bath Birr 20000
upgrades
Time of sales six months ago
(rate of appreciation 5 percent)

11. If a 1400 square foot home sells for birr 165,000 and a 1500 square foot home with similar
features in the same neighborhood sells for birr 175,000. What is the value of finished living
areas per square foot in this neighborhood?
12. Base on the information shown below for the subject property and three recently sold
comparable properties, what is the appropriate estimated value of the subject property?

Subject Sales 1 – 120,000 Sales 2 – 110,000 Sales 3 – 112,000

1200 sq ft 1300 sq ft 1300 sq ft 1300 sq ft
2 bedrooms 3 bedrooms 2 bedrooms 2 bedrooms
2 baths 2 baths 1 bath 2 baths

13. A licensee is preparing a CMA in connection with listing house for sale. The two story brick
house is 12 years old and has 2800 square feet of living area, 4 bedrooms, 3 ½ baths, 2 car
attached garage, a larger veranda and no significate upgrades. The licensee finds in the same
neighborhood a very similar two story brick house that sold 6 months ago for $125,000. That
house is 11 years old and has 2750 square feet of living area. 4 bedrooms, 3 baths, 2 car
attached garage, a large veranda, and recent kitchen upgrade valued at $ 18,000. Current
contraction cost in the area for similar houses are birr 115 per square foot, $ 9,000 for a full
bath and $ 6,000 for a half bath. Price appreciation in the areas has been about 1 percent during
the past year. Based on this one comparable, which of the following is the best estimate of
market value for the house being listed (round to the nearest thousand dollars)
Cost approach

14. A house similar to the subject property in size, layout and other physical characteristics has
total life of 50 years. The subject chronological age is 20 years. Its effective age, based on its
condition and environment, is 18 years because it is in poor condition and is located near a
gasoline service station. The total replacement cost of and land value of a subject house is
given as 668,175 and 180,000 respectively. By Using Age-Life Method of Calculating
Depreciation indicate the value of the house based on cost approach

15. How much depreciation has accumulated on a 40 year old warehouse which was built with a
replacement value of birr 750,000 if the building has an estimated economic life of 60 years and
an effective age of 28 years

16. Assume that in light of current market expectations, the five story office building appraised
lacks elevator. The estimated cost of elevator as installed when the building built was Birr
450,000, but the cost to install it today Birr 800,000. Similar property with same problem
sold for Birr 650,000 less than properties with elevators. The improvement is 14 years old.
Estimate the functional obsolesce.
17. A Valuer has been given an assignment to appraise a building which was built in 2001 at a cost
of Birr 550,000.  The valuer finds the following published index. Estimate the reproduction cost
of the building.
Year Index
2001 100
2002 112
2003 134
2004 156
2005 178
2006 210
2007 250
2008 290
2009 335
18.