Property Valuation
In a Pennsylvania residential appraisal, what is the significance of 'concessions' when analyzing comparable sales?
APrice reductions given to buyers who waive home inspections
BFinancial incentives (seller-paid closing costs, rate buydowns, personal property) included in a sale that must be adjusted out to reflect the property's true market value✓ Correct
CHOA fee waivers offered by developers to attract buyers
DTax concessions granted by municipalities to promote development
Explanation
Sales concessions — seller-paid closing costs, mortgage rate buydowns, personal property included in the sale, or other financial incentives — can inflate the nominal sale price above the property's true market value. Appraisers must adjust comparable sales downward for concessions to arrive at the comparable's 'cash equivalent' price, reflecting what a buyer would have paid without the concessions.
Related Pennsylvania Property Valuation Questions
- An appraiser in the Pocono Mountains region of Pennsylvania values a ski resort property using primarily which approach?
- Plottage refers to the increase in value that results from:
- External (economic) obsolescence is different from functional obsolescence because it:
- In a Pennsylvania CMA (Comparative Market Analysis), a licensee should use comparable sales from within what time frame to be most meaningful in a stable market?
- Highest and best use analysis considers which four criteria?
- The income capitalization approach to value divides a property's net operating income (NOI) by the:
- An appraisal using the 'income approach' that produces a value of $1,200,000 while the sales comparison approach indicates $1,050,000 for the same property. The appraiser would likely give more weight to:
- Comparative market analysis (CMA) and an appraisal are different in that:
Practice More Pennsylvania Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Pennsylvania Quiz →