Humber/Ontario Real Estate Course 2 Exam Practice

A property being evaluated has a 40-foot frontage, whereas a comparable property sold recently has a 45-foot frontage. If frontage requires a $5,000 per foot adjustment, what adjustment is necessary?

1. Minus adjustment of $5,000

2. Minus adjustment of $25,000

3. No adjustment needed for frontage differences.

4. Plus adjustment of $25,000

The correct answer is: Minus adjustment of $25,000

The correct answer is the minus adjustment of $25,000. In this scenario, the property being evaluated has a frontage of 40 feet, while the comparable property has a frontage of 45 feet. The difference between the two properties is 5 feet. Since the adjustment rate for frontage is $5,000 per foot, we need to multiply this rate by the difference in frontage between the two properties (5 feet), which results in a total adjustment of $25,000. This adjustment is necessary to account for the difference in frontage between the two properties being compared. Option A is incorrect because a minus adjustment of $5,000 does not take into account the full difference in frontage between the two properties. Option C is incorrect as an adjustment is necessary due to the difference in frontage. Option D is incorrect because the adjustment is a minus adjustment, not a plus adjustment, as the property being evaluated has less frontage compared to the comparable property.