Humber/Ontario Real Estate Course 4 Exam Practice

What adjustment is required for a comparable property if the subject lot has a 47-foot frontage and the comparable lot has a 52-foot frontage with an adjustment of $7,350 per front foot?

1. A plus adjustment of $7,350

2. A plus adjustment of $29,400

3. A minus adjustment of $7,350

4. A minus adjustment of $29,400

5. A minus adjustment of $36,750

6. A plus adjustment of $36,750

The correct answer is: A plus adjustment of $29,400

In this scenario, the subject property has a 47-foot frontage, while the comparable property has a larger 52-foot frontage. The adjustment for the difference in lot size is based on the value assigned to each front foot, which is $7,350. To determine the total adjustment needed, we first calculate the difference in frontage between the two properties. The difference is 52 feet (comparable) minus 47 feet (subject), which equals 5 feet. Since the comparable property is larger by 5 feet, it would typically command a higher value. Now, to find the financial adjustment, we multiply the 5-foot difference by the value per front foot: 5 feet x $7,350 per foot equals $36,750. Because the subject property has less frontage than the comparable property, the adjustment reflects a reduction in value or a minus adjustment. Therefore, a total adjustment of $36,750 needs to be subtracted from the value of the comparable property to accurately reflect the value of the subject property. This leads to the understanding that a minus adjustment of $36,750 should be applied, as the larger frontage of the comparable property contributes more value compared to the subject property.