What is a Market Adjustment?
A market adjustment is a price increase that auto dealers charge above the MSRP. In some cases, this increase may be thousands of dollars, or even more. The increase is based on economic factors, as well as consumer desires. When a dealer increases the price of a car, they are responding to a lack of inventory or high demand. The price increase may be temporary, or it could last for several months.
A market adjustment occurs when market conditions change due to new information or signals. These signals may include changes in supply and demand, new regulations, or changes in interest rates. The latter can have a significant impact on the real estate market, as it lowers the number of mortgage applications, and thus slows down demand for homes.
When it comes to cars, some dealerships add market adjustments to the price of their vehicles, such as the Chrysler PT Cruiser. Other examples of cars subject to market adjustments are the Volkswagen New Beetle and the Pontiac Solstice. Even some special edition vehicles, like the Harley-Davidson Ford F-150, may also be subject to market adjustments.
Market adjustment factors are used to make valuations more accurate. They reflect supply and demand preferences, and are usually required to make value estimates based on a cost approach more accurate. The market adjustment factor should be based on the type of property and area, and should be based on sales ratio studies and other market analyses. Accurate cost schedules, condition ratings, and depreciation schedules can minimize the need for market adjustment factors.