Florida Broker Practice Exam

What term best describes a fee-based analysis of property value based on recent sales of similar properties?

1. Cost Approach

2. Sales Comparison Approach

3. Income Approach

4. Comparative Market Analysis

The correct answer is: Comparative Market Analysis

The term that best describes a fee-based analysis of property value based on recent sales of similar properties is a Comparative Market Analysis. This method evaluates the market value of a property by comparing it to similar properties that have recently sold in the same area. It takes into account the characteristics of the properties, such as size, location, condition, and amenities, to determine a fair market price. A Comparative Market Analysis is typically used by real estate professionals when pricing a property for sale or when advising buyers on a fair offering price. It relies on current market data, which can quickly reflect fluctuations in property values due to market trends or economic changes, making it a relevant and timely assessment tool. In contrast, the Cost Approach primarily evaluates the value based on the cost to replace or reproduce the property, factoring in depreciation and the value of the land. The Sales Comparison Approach is similar to the Comparative Market Analysis but is typically used in formal appraisals rather than informal analysis; it focuses on recent sales data in a statistical manner without the fee-based aspect. The Income Approach is applied to investment properties and evaluates value based on the income potential generated by the property. By highlighting recent sales, the Comparative Market Analysis provides a realistic snapshot of the market and helps stakeholders make informed