Humber/Ontario Real Estate Course 3 Exam Practice

When determining the market value of a property, which factor should be excluded?

1. Comparable property sales in the area.

2. The original purchase price of the property.

3. The current condition of the property.

4. Local economic conditions.

The correct answer is: The original purchase price of the property.

The original purchase price of the property should be excluded when determining its market value because market value is based on current market conditions rather than historical transactions. The original price may not accurately reflect the property's value today due to fluctuations in the market, improvements made to the property, changes in buyer demand, or shifts in local economic conditions. In contrast, comparable property sales provide essential context for understanding what similar properties are selling for in the current market, reflecting current buyer sentiments and market dynamics. The current condition of the property plays a critical role, as it directly influences how much buyers are willing to pay. Local economic conditions also serve as a backdrop for market analysis; they can affect overall demand and pricing trends. Therefore, while other factors should be considered in assessing market value, the original purchase price is less relevant to the current market landscape.