California Real Estate Practice Exam

What type of adjustment is required in a sale between family members in the sales comparison approach?

1. Market condition adjustment

2. Location adjustment

3. Conditions of sale adjustment

4. Physical characteristics adjustment

The correct answer is: Conditions of sale adjustment

In a sale between family members, the Conditions of Sale adjustment is required in the sales comparison approach. This is because when a sale is between close relatives, the transaction may not accurately reflect market value due to the personal relationship and potential lack of competitive bidding. The other options are incorrect because a Market Condition adjustment accounts for overall changes in the real estate market, a Location adjustment accounts for differences in location and neighborhood, and a Physical Characteristics adjustment accounts for differences in the physical features of the properties. These adjustments do not take into consideration the personal relationship between the buyer and seller in a family member sale.