Humber/Ontario Real Estate Course 2 Exam Practice

When estimating the market value of a home, how should a salesperson adjust for a comparable property with a swimming pool?

1. Adjustment should be based on the current value of the pool, not the construction cost.

2. No adjustment should be made.

3. Adjustment should be based on the construction cost of the pool, not the current value.

4. Adjustment should be based on the difference between construction cost and current value.

5. Adjustment should be based on the average of cost and current value.

6. Adjustment should consider depreciation over time.

The correct answer is: Adjustment should be based on the current value of the pool, not the construction cost.

When estimating the market value of a home, adjustments for comparable properties are crucial. In this case, when a comparable property has a swimming pool, the adjustment should be based on the current value of the pool, not the construction cost. The reason behind this is that the market value of the property is determined by what buyers are willing to pay in the current market. The construction cost of a swimming pool may not necessarily reflect its current value due to factors such as depreciation, maintenance costs, and changing market trends. Therefore, basing the adjustment on the current value of the pool provides a more accurate reflection of its impact on the overall market value of the property. Options B, C, D, E, and F are not the correct choices because they do not take into account the fundamental principle that adjustments should align with the current market value rather than historical costs or average values.