Navigating the Hawaii Pre-Licensing National Exam: A Guide to CMAs

When preparing a CMA, how is the adjustment made for a comparable property that is older and has fewer baths compared to the subject property?

• A. Increase sale price for age, decrease for baths
• B. Decrease sale price for age, increase for baths
• C. No adjustment is necessary
• D. Increase sale price for both age and baths

Answer: (B)

When preparing a Comparative Market Analysis (CMA), adjustments are made to ensure that the comparable properties align more closely with the subject property in terms of features and conditions that affect value. In this scenario, when the comparable property is older and has fewer baths than the subject property, these differences must be addressed in the adjustments. For an older property, the general real estate principle asserts that newer properties tend to command higher prices due to their modern features, fewer maintenance issues, and overall desirability. Thus, in this case, the sale price of the comparable property should be decreased to account for its age, reflecting the reduced market appeal and potential buyer preference for newer properties. Additionally, having fewer baths than the subject property usually detracts from the comparable's value. Since bathrooms are a significant factor in home valuation, a comparable property with fewer baths should also have its sale price decreased to reflect this deficiency compared to the subject property, which has more amenities. Therefore, for both age and the number of baths, adjustments to decrease the sale price of the older, fewer-bath comparable are necessary, leading to the conclusion that the appropriate action when preparing this CMA would be to decrease the sale price for the age and increase it for the baths—but since the context is

When it comes to preparing for the Hawaii Pre-Licensing National Exam, understanding how Comparative Market Analysis (CMA) works can feel like stepping into a whole new world—one filled with numbers, properties, and market nuances. So, let’s break it down in a way that makes sense, shall we?

First off, you might be wondering, "What exactly is a CMA?" Well, think of it as a tool that helps real estate agents and buyers evaluate a property's value based on recent sales of similar properties in the same area. It's like putting together a puzzle where each piece represents a different property, and you want to make sure they fit together as seamlessly as possible.

Now, let’s talk specifics. Say you’re comparing a subject property with an older, less desirable comparable property that has fewer baths. If you find yourself scratching your head about how to adjust for these differences, fret not! You’re not alone, and with the right understanding, you’ll be prepared for this kind of question on the exam.

For a property that’s older than the subject property, the common logic is to decrease its sale price. Why? Because older properties generally lack the appeal of newer constructions—think modern amenities versus vintage charm (which can be appealing but also means more potential issues). By acknowledging this age difference, you’re aligning your CMA with market perceptions.

Now onto the bathrooms, a crucial aspect of value assessment. Let’s face it: who wants to fight over a single bathroom in a home? More baths generally mean more desirability, and if your comparable property has fewer baths, it’s going to pull down the sale price too. Just imagine family gatherings or hosting friends; wouldn't having extra bathrooms be a selling point?

With all that in mind, when you sit down to prepare your CMA for the exam, remember the mantra: decrease for age, increase for baths. You’re not just guessing; you’re applying real market logic that potential buyers and sellers think about in the real world.

So, what’s the takeaway here? Adjusting the sale prices for comparative properties based on age and amenities like bathrooms isn’t just a test of your knowledge—it's a reflection of what buyers want. Whether you’re studying late at night or during those rare moments of downtime on the beach, I hope this helps you feel more confident when tackling CMAs on your exam.

As you gear up for the Hawaii Pre-Licensing National Exam, remember to immerse yourself in real-life scenarios, practice analyzing properties, and keep these adjustments in mind. Doing so will make you a better realtor in the long run because knowledge truly is power in the world of real estate!