A comparable sold for $300,000 and has a superior view that the subject lacks. Verified evidence supports a downward view adjustment of 6.5% of that comparable’s price. Which adjusted price and method statement are appropriate?
Correct Answer
D) $280,500; apply the supported percentage to the comparable's price
The comparable has the superior view, so remove the supported 6.5% of its $300,000 price: 300000×(1−0.065)=$280,500. A percentage form is supportable when evidence establishes the proportional effect and the price base is identified. Adjusting upward for a superior comparable feature reverses the direction, and neither a blanket ban on percentage adjustments nor a rule that view never matters is correct.
Why This Is the Correct Answer
Option D is correct because a superior feature in the comparable calls for a downward adjustment: $300,000 x (1 - 0.065) = $280,500. A percentage adjustment is acceptable when evidence supports a proportional effect and the price base is identified.
Why the Other Options Are Wrong
Option A: $319,500; superior comparable features require an upward adjustment
Option A, $319,500, adds 6.5% ($300,000 x 1.065) on the claim that superior comparable features require an upward adjustment. That reverses the direction: when the comparable is superior, the adjustment is subtracted, giving $280,500.
Option B: $280,500; percentage adjustments are not permitted in the grid
Option B has the right figure, $280,500, but states that percentage adjustments are not permitted in the grid. That statement is wrong; percentage adjustments are acceptable when supported by evidence, so the reasoning does not match the correct method.
Option C: $300,000; view differences do not support an adjustment
Option C, $300,000, leaves the price unadjusted on the claim that view differences do not support an adjustment. The stem states verified evidence supports a 6.5% view adjustment, so $19,500 must be subtracted.
Superior comp, subtract
The comparable is being made to look like the subject, so a better comparable gets marked down and a worse one gets marked up.
How to use: Use this to check the direction before doing any arithmetic.
Exam Tip
When two options show the same number, compare their reasons; the correct choice must have both the right figure and the right method.
Common Mistakes to Avoid
- -Adding an adjustment for a feature the comparable has but the subject lacks
- -Believing percentage adjustments are prohibited
- -Selecting an answer with the right number but the wrong reasoning
Concept Deep Dive
Analysis
This question tests both adjustment direction and the use of percentage adjustments. The comparable has a superior view, so its price is reduced, and the supported 6.5% is applied to the comparable's identified $300,000 price. Two options share the correct figure, so the method statement decides the answer.
Background Knowledge
When a comparable's characteristic is superior to the subject's, the adjustment is negative; when it is inferior, the adjustment is positive. Adjustments may be expressed in dollars or as percentages, and percentage and dollar adjustments are often combined, provided market evidence supports them.
Real-World Application
In a hillside neighborhood, paired sales show homes with open valley views sell for about 6.5% more than similar homes without views. An appraiser reduces a view comparable's price by that percentage before comparing it to a subject with no view.
More Sales Comparison Questions
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Verified applicable evidence supports $70 per sqft for material nonzero size differences, but an appraiser uses $50. What follows?