Property ValuationIntermediateCalifornia Exam

In a 'buyer's market,' real estate prices tend to:

ARise because there are more buyers than homes available

BRemain stable because supply and demand are in balance

CDecline or stabilize because there are more properties available than buyersCorrect

DRise because sellers have more negotiating power

Why Decline or stabilize because there are more properties available than buyers Is Correct

Answer C: Decline or stabilize because there are more properties available than buyers

A buyer's market occurs when supply (available properties) exceeds demand (active buyers). With more choices and less competition, buyers have greater negotiating power, which tends to put downward pressure on prices.

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.

People Also Study

Key Terms to Know

Comparable Sales (Comps)

Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.

Short Sale

A sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.

Appraisal

A professional estimate of a property's market value prepared by a licensed or certified appraiser.

Capitalization Rate (Cap Rate)

A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.

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