Final answer:
In the market data approach, when a comparable property is inferior to the subject property, the correct adjustment is to increase the value of the comparable property. This ensures that the comparable properties accurately reflect the features of the subject property, facilitating a precise valuation.
Step-by-step explanation:
In the market data approach to appraising property values, when a comparable property is inferior to the subject property, the appropriate answer to the student's question is b) the comparable property is adjusted positively. This means that if the comparable property lacks features that the subject property has, the value of the comparable property is adjusted upwards to simulate the value of those missing features if they were present. This adjustment process allows the appraiser to establish a more accurate value for the subject property by making the comparable properties more similar in characteristics. Conversely, if a comparable property has features that the subject property lacks, the value of the comparable would be adjusted downward.
Understanding these adjustments is essential, especially considering the psychological impact of housing market fluctuations on consumer confidence. A negative report on home prices can shift aggregate demand (AD) to the left, affecting consumer spending, Gross Domestic Product (GDP), and price levels. Adjusting comparable properties correctly ensures accurate market assessments that can influence the perceptions of value and economic decisions.