# Real Estate Valuation- Sales Comparison Approach

from SchwPro John Williams wants to purchase an apartment complex. The complex consists of 75 units. Recent sales of nearby apartment complexes have resulted in the following information. Characteristics===========Units==========Slope Coefficient in \$ per Unit Proximity to downtown=====In miles========== -350,000 Vacancy rate============Percentage======== -50,000 Building size============Units=============== +75,000 Williams’ proposed apartment complex is 4 miles away from downtown and has an estimated vacancy rate of 6%. Using the sales comparison approach, the value of the apartment complex is: A) \$4,060,000. B) \$4,222,000. C) \$3,894,500. D) \$4,160,000. Your answer: D was incorrect. The correct answer was B) \$4,222,000. Value = (-350,000)(4) + (-50,000)(0.06) + (75,000)(75) = 4,222,000 I chose D due to ‘lack of a genuine choice’ (how a la democracy!) BUT Since when do they calculate percentages in decimals for this method ? this doesn’t make sense… the Schweser notes don’t do it this way either and anyway it doesn’t do any good to my already fading hopes in Alternative Investments…

it seems to be an error. talk to schweser about it. Should be using 6 in my opinion. CP