A certified residential appraiser applies a 6.5% upward adjustment to a comparable’s sale price for superior view. The subject’s sale price is $320,000. The comparable sold for $300,000 and has the superior view. What is the resulting adjusted sale price of the comparable, and what USPAP principle governs whether percentage or dollar form is permissible for this adjustment?
Correct Answer
D) $319,500; percentage adjustments are permitted for any feature if the appraiser documents the rationale and supports them with market data.
Adjusted price = $300,000 × 1.065 = $319,500. USPAP does not prohibit percentage adjustments; Standards Rule 1-4 permits either dollar or percentage form *if supported by credible market evidence*. For features like view, where proportional impact is observed (e.g., high-end homes show similar % premiums), percentage adjustments are appropriate and common. SR 1-4(d) explicitly allows percentage adjustments when justified. Option D correctly states the permissibility and condition (support + documentation). Option A incorrectly asserts prohibition; B adds an unnecessary restriction ('consistent across range') not required by USPAP; C overstates the preference for dollar adjustments — both forms are acceptable when supported.
Why This Is the Correct Answer
The choice that says percentage adjustments are permitted for any feature when the appraiser documents the rationale and supports them with market data states the actual standard: support plus documentation, not a restriction on form. It matches the general principle that USPAP prescribes what must be credible and disclosed rather than prescribing technique. It also correctly refuses to invent a special rule for view or any other single characteristic. The pairing of the correct arithmetic with the correct policy statement is what makes it the best answer.
Why the Other Options Are Wrong
Option A: $319,500; percentage adjustments are prohibited unless applied to market conditions per SR 1-5.
There is no prohibition on percentage adjustments, and no rule limits them to market conditions adjustments. Market conditions adjustments are indeed commonly expressed as a percentage because time-related change tends to be proportional, which is what makes this distractor feel familiar. Generalizing a common practice into an exclusive rule is the error.
Option B: $319,500; percentage adjustments are acceptable only when supported by consistent proportional market reactions across a range of sale prices.
Requiring consistent proportional market reactions across a range of sale prices is a sound analytical instinct and often a good reason to prefer a percentage over a dollar amount, but it is an extra condition the standard does not impose. Presenting a best practice as a permissibility test overstates the requirement. The governing test is whether the specific adjustment is supported, not whether proportionality holds across the entire price spectrum.
Option C: $319,500; percentage adjustments are always inferior to dollar adjustments and violate SR 1-4.
Nothing establishes dollar adjustments as inherently superior, and using a supported percentage adjustment violates no standard. In practice the better form depends on the characteristic: some differences scale with price, such as view or condition in a luxury segment, while others are close to fixed, such as an extra bathroom or a garage bay. Declaring one form always inferior ignores that dependence.
USPAP Sets the Bar, Not the Tool
USPAP is a standard of care, not a cookbook. Whenever an answer choice says a technique is prohibited, required, or always inferior, treat that absolute wording as a red flag. The recurring true statement is: any method is fine if it is supported, applied competently, and explained.
How to use: In technique-permissibility items, scan for the option that pairs permission with a condition of market support and disclosure. Eliminate any option containing prohibited, always, never, or only, unless the stem is about a genuine bright-line rule such as contingent compensation.
Exam Tip
When every option shows the same computed figure, stop computing and read the second clause of each sentence. The distinguishing content is in the policy language, not the number.
Common Mistakes to Avoid
- -Adjusting the subject instead of the comparable
- -Reversing the sign, adjusting a superior comparable upward
- -Applying a percentage adjustment as a rule of thumb with no paired-sales or other market support in the workfile
Concept Deep Dive
Analysis
The item bundles a small computation with a policy question. The computation is straightforward: the comparable is inferior in nothing and superior in view, but the adjustment is stated as a 6.5 percent upward adjustment to the comparable, so $300,000 multiplied by 1.065 yields $319,500, and every option shows the same number, which tells you the math is not what is being tested. The real question is whether percentage adjustments are allowed. USPAP is method-neutral: it requires that adjustments be supported by market evidence and that the appraiser's analysis be credible, but it does not dictate the form in which an adjustment is expressed. Dollar adjustments, percentage adjustments, and paired sales, regression, cost-based, and income-based derivations are all acceptable when the appraiser can show the support and explain the reasoning.
Background Knowledge
You need the mechanics of the sales comparison approach, including that adjustments are applied to the comparable and never to the subject, and the sign convention that a comparable superior to the subject is adjusted downward while an inferior comparable is adjusted upward. You also need the principle that USPAP requires credible, supported analysis rather than prescribing a specific adjustment technique.
Real-World Application
An appraiser adjusting for a canyon view pulls matched pairs across three price tiers, finds the premium runs a fairly steady 6 to 7 percent of sale price rather than a fixed dollar amount, applies a percentage adjustment for that reason, and documents the pairs and the choice of form in the report so the reviewer can replicate it.
More Sales Comparison Questions
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