Hawaii Pre-Licensing National Practice Exam

Which source may be utilized in the direct sales comparison approach?

1. Local government sales records

2. Multiple listing companies

3. Online real estate platforms

4. Public auctions

The correct answer is: Multiple listing companies

The direct sales comparison approach involves estimating the value of a property by comparing it to similar properties that have recently sold in the same area. This method is particularly effective in assessing market value, as it relies on factual data from transactions that reflect current market conditions. Utilizing data from multiple listing companies is crucial in this approach because these companies compile comprehensive databases of real estate transactions, including details such as sale prices, property features, and closing dates. This information allows for accurate comparisons of properties and helps derive a market value based on the sales of comparable homes. In contrast, local government sales records might provide useful historical data, but they may not always be as current or detailed as the information gathered by multiple listing services. Online real estate platforms can also offer listings and price estimates, yet they might lack the rigorous, documented sales data that multiple listing services provide. Public auctions, while they can provide information on certain sale transactions, do not typically represent the broader market or offer as many comparables as listings from multiple listing companies. Therefore, relying on multiple listing companies gives a more accurate and relevant basis for comparison in determining property value using the sales comparison approach.