Property ValuationIntermediateArizona Exam

In a depressed market, Arizona comparable sales from 6-12 months ago may need a:

ADownward time adjustment to account for value decline since the sale dateCorrect
BUpward time adjustment to account for the market having recovered
CNo adjustment since time adjustments are not permitted
DUpward adjustment to bring them to current market levels

Why Downward time adjustment to account for value decline since the sale date Is Correct

Answer A: Downward time adjustment to account for value decline since the sale date

In a declining market, older comparable sales were made when prices were higher. The appraiser makes a downward time adjustment to bring older sales to current market conditions, reflecting the subsequent price decline.

Exam Tip: Property Valuation

Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.

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