A comparable closed at $310,000. Verification supports removing a $4,000 concession-induced price effect. Apply a simple +0.3% monthly time adjustment to that normalized base for ten verified contract-to-effective-date months, then add a supported $65/sqft contribution for its 120-sqft area shortfall. What adjusted price results?
Correct Answer
D) $322,980
(310000 − 4000) × (1 + 0.003 × 10) + 120 × 65 = 322980. Each percentage base, price effect and marginal area contribution is expressly supplied; no automatic concession-face-value deduction is inferred.
Why This Is the Correct Answer
Option D is correct because the normalized price is $310,000 − $4,000 = $306,000, and the time adjustment is $306,000 × (1 + 0.003 × 10) = $306,000 × 1.03 = $315,180. The comparable is 120 square feet smaller, so add 120 × $65 = $7,800, giving $322,980. The concession deduction is the supported price effect, not a face-value amount.
Why the Other Options Are Wrong
Option A: $327,100
Option A shows $327,100, which skips the concession step: $310,000 × 1.03 + $7,800 = $319,300 + $7,800 = $327,100. Removing the supported $4,000 price effect first gives $306,000 × 1.03 + $7,800 = $322,980.
Option B: $313,800
Option B shows $313,800, which omits the time adjustment: $306,000 + $7,800 = $313,800. Ten verified months at +0.3% per month add $9,180, giving $322,980.
Option C: $323,214
Option C shows $323,214, which applies time after the area adjustment: ($306,000 + $7,800) × 1.03 = $313,800 × 1.03 = $323,214. The stem applies time to the normalized base only, so the correct result is $306,000 × 1.03 + $7,800 = $322,980.
Clean it, time it, fit it
Clean the price of concession effects, time it to the effective date, then fit it to the subject's features.
How to use: Use this to keep the order straight in multi-step adjustment problems.
Exam Tip
Write each intermediate figure; when two answers differ only slightly, the gap usually comes from applying a percentage to the wrong base.
Common Mistakes to Avoid
- -Applying the time adjustment before removing the concession effect
- -Including dollar feature adjustments in the base for a percentage time adjustment
- -Deducting the concession face value instead of its price effect
Concept Deep Dive
Analysis
This question tests a multi-step adjustment sequence: concession normalization, a simple time adjustment on the normalized base, then an area adjustment. The order is set by the stem, and each percentage must be applied to the stated base. Distractors come from skipping a step or applying the percentage to the wrong base.
Background Knowledge
Adjustments are made to the comparable toward the subject and often follow a sequence where transactional items come before market conditions and property characteristics. Concession adjustments must be negative and equal to the supported price effect. Time adjustments must be supported by evidence.
Real-World Application
A comparable closed with a seller credit that the appraiser verified raised the price by $4,000. She removes that effect, applies a supported monthly market trend for ten months, and then adds a per-square-foot contribution for the comparable's smaller living area.
More Sales Comparison Questions
Which stated cause of supported value loss is external?
Improvement cost new is $450,000. Separately supported improvement depreciation deductions of $45,000, $25,000, $15,000 are expressly nonoverlapping and not already excluded from cost new. Add supported site value of $125,000, already reflecting any site losses. What total indicated value results?
Which two depreciation categories may each be classified as curable or incurable by comparing the cost to remedy a deficiency with the value gained?
Improvement cost new is $800,000. Separately supported improvement depreciation deductions of $120,000, $80,000, $40,000 are expressly nonoverlapping and not already excluded from cost new. No site is included. What depreciated improvement amount results?
The principle of anticipation in real estate valuation states that:
Which highest-and-best-use criterion addresses whether a proposed use is allowed by zoning and applicable legal restrictions?
Three comparables produce adjusted indications of $312,000, $309,000 and $315,000, requiring gross adjustments of 9%, 14% and 22% respectively. Verification also establishes that the first sale is the closest competitive substitute and its adjustments are better supported than the other two. Which indication deserves the most weight on those facts?
When reconciling value indications from the three approaches to value, an appraiser should:
A property sold at a cash-equivalent price of $1,062,500. Its stabilized annual NOI is $85,000. What is the indicated overall rate?
In reconciliation, an appraiser should:
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Cost Approach
13.6% of exam
Income Approach
8.2% of exam