An industrial building sold for $800,000. Six months later, it sold again for $880,000. No physical changes were made to the property over this time. What is the annual adjustment for market conditions indicated by this sale?

An industrial building sold for $800,000. Six months later, it sold again for $880,000. No physical changes were made to the property over this time. What is the annual adjustment for market conditions indicated by this sale?

• A. Upward 10%
• B. Upward 20%
• C. Upward 5%
• D. Upward 40%

Answer: (B)

Market conditions adjustments capture how the overall market moved between the sale dates, separate from any physical changes to the property. Here, the price rose from 800,000 to 880,000 in six months, a 80,000 increase which is 10% of 800,000. Since six months passed, you annualize that rate by doubling it, giving an upward 20% per year. No physical changes were involved, so this rise is attributed to market conditions.

Market conditions adjustments capture how the overall market moved between the sale dates, separate from any physical changes to the property. Here, the price rose from 800,000 to 880,000 in six months, a 80,000 increase which is 10% of 800,000. Since six months passed, you annualize that rate by doubling it, giving an upward 20% per year. No physical changes were involved, so this rise is attributed to market conditions.