California Real Estate Practice Exam

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In appraising a property, what is the process called by which dissimilarities are accounted for in comparing a subject property and a comparable property?

Making adjustments
Differential analysis
Comparative market analysis
Matching models

The correct answer is: Making adjustments

In appraising a property, making adjustments is the process by which dissimilarities between a subject property and a comparable property are accounted for. This involves identifying the differences between the two properties, such as size, age, and location, and adjusting the value of the comparable property to make it more comparable to the subject property. This is different from differential analysis, which involves analyzing the differences in market factors between different regions or locations. Comparative market analysis, on the other hand, is the process of evaluating the current market value of the subject property by comparing it to similar properties in the local market. Matching models refer to a specific method of property valuation based on matching a subject property to similar properties in terms of size, age, and location.