Automotive Market Analysis Flashcards

In a sales comparison approach, what is the primary purpose of adjusting comparable sales?

Answer: To account for differences between each comparable and the subject vehicle

Adjustments reconcile differences such as mileage, options, and condition so comparables reflect the subject.

When adjusting a comparable that has a feature the subject vehicle lacks, the appraiser should:

Answer: Subtract the feature's contributory value from the comparable's price

Adjustments are made to the comparable; a superior comparable is adjusted downward.

Which comparable sale would generally be given the MOST weight in reconciliation?

Answer: One with the fewest and smallest net adjustments

Comparables requiring minimal adjustment are most similar to the subject and most reliable.

A comparable sold 10 months ago in a market that has since declined 8%. What adjustment is appropriate?

Answer: A downward market-conditions (time) adjustment

A time adjustment brings older sales in line with current, lower market levels.

Which factor typically has the largest impact on value variance among otherwise identical late-model vehicles?

Answer: Odometer mileage

Mileage is among the most significant value drivers for comparable late-model vehicles.

When few local comparables exist for a rare vehicle, the appraiser should most appropriately:

Answer: Expand the geographic or time search and adjust for location and market differences

Widening the search and making supported adjustments yields a credible value when local data is thin.

A comparable sale between a father and son at a discounted price should be treated as:

Answer: A non-arm's-length transaction that is unreliable for market value

Related-party sales may not reflect open-market conditions and are generally excluded or heavily scrutinized.