Verification establishes that a neighboring buyer paid a $20,000 premium solely for a purchaser-specific assemblage benefit unavailable to typical competing buyers. Which comparison element describes that special motivation?
Correct Answer
C) Conditions of sale
A verified purchaser-specific assemblage premium can reflect special motivation under conditions of sale, distinct from financing terms or physical characteristics. Investigate whether it is atypical of the relevant market and support its price effect; do not automatically remove every assemblage-related benefit.
Why This Is the Correct Answer
Option C is correct because conditions of sale covers buyer and seller motivations, and a purchaser-specific assemblage premium is a special motivation. The $20,000 premium was paid for a benefit typical competing buyers could not obtain. The appraiser investigates whether that motivation is atypical of the market and supports its price effect.
Why the Other Options Are Wrong
Option A: Financing terms
Option A is wrong because financing terms concern how the purchase was paid for, such as loans or concessions. The stated premium arises from the buyer's assemblage motivation, not from the financing.
Option B: Market conditions over time
Option B is wrong because market conditions over time address changes in price levels between the sale date and the effective date. A premium tied to one buyer's special benefit is not a time-related market change.
Option D: Physical building condition
Option D is wrong because physical building condition describes the state of the improvements. The $20,000 premium came from the buyer's assemblage motivation, not from any physical feature of the building.
Conditions of sale means motives
When the reason behind a price is who the buyer or seller was and why they acted, think conditions of sale.
How to use: Use this link when a question describes an unusual buyer or seller motivation and asks which element applies.
Exam Tip
Match the cause of the price effect to the element: motivation points to conditions of sale, payment terms to financing, and time to market conditions.
Common Mistakes to Avoid
- -Classifying a buyer's special motivation as a financing issue
- -Treating a motivation premium as a physical characteristic
- -Removing every assemblage-related benefit without analyzing the market
Concept Deep Dive
Analysis
This question tests classification of a buyer's special motivation among the elements of comparison. A neighbor paying a premium for an assemblage benefit unavailable to typical buyers reflects buyer motivation, which falls under conditions of sale. The other options describe different elements unrelated to motivation.
Background Knowledge
Typical elements of comparison include property rights conveyed, financing terms, conditions of sale, expenditures after purchase, market conditions, location, physical, economic and legal characteristics, and non-realty components. Conditions of sale addresses buyer and seller motivations, such as a related-party sale or a buyer paying extra for a benefit unique to them.
Real-World Application
An adjoining owner pays above market for a lot to combine it with their parcel. When using the sale as a comparable, the appraiser verifies the buyer's motivation and considers a conditions-of-sale adjustment if the premium is atypical of the market.
More Sales Comparison Questions
Supported adjustments are: non-market financing $10,000, GLA $36/sf, garage $3,500 per car, pool/spa $12,500. A comparable identical to the 2,800 sf subject sold for $267,000 with non-market financing. What is its adjusted price?
Using GLA $36/sf and non-market financing $10,000: a 3,100 sf comparable sold for $277,000 with non-market financing; the subject has 2,800 sf. Bath count differences are not adjusted. What is the adjusted price?
Using garage $3,500 per car and pool/spa $12,500: a comparable with a 2-car garage and a pool/spa sold for $268,000. The subject has a 3-car garage and no pool. What is the adjusted price?
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Previous Question
The subject is a single-family home with its own private driveway. Comparable 3 sold subject to a recorded easement that lets the neighboring owner use its driveway to reach a rear garage. Paired sales in the neighborhood show homes burdened by such shared-driveway easements sell for about $8,000 less than similar homes without them. Which adjustment applies to Comparable 3?
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A builder offers to combine a vacant-lot sale with the contract price for a new house (improvements only) to create a comparable. How does Fannie Mae treat this?