Humber/Ontario Real Estate Course 3 Exam Practice

To accurately compare properties, why is the lack of recent comparables a concern?

1. Time adjustments should always be applied

2. Non-arm's length transactions are equally valid

3. Positive adjustments should account for better features

4. Few recent comparables limit approach validity

5. All comparables should have identical features

6. Distances between properties should be minimal

The correct answer is: Few recent comparables limit approach validity

The concern with the lack of recent comparables lies in the limited validity of the comparison approach when evaluating properties. Recent comparables provide a benchmark for understanding current market conditions, pricing trends, and buyer preferences. When there are few or no recent sales of similar properties, it becomes increasingly difficult to establish an accurate and reliable valuation. The absence of current data can lead to misleading conclusions and flawed estimates of a property’s worth, as older comparables may no longer reflect current market dynamics. The valuation process relies heavily on recent transactions to draw parallels and make informed decisions. Without enough recent comparables, the analysis may lack relevance and lead to incomplete or inaccurate assessments of value, thereby compromising the credibility of the valuation.