A comparable closed three months before the effective date but went under contract seven months before it. The market has risen 0.4% per month. The sale price was $275,000. What market conditions adjustment is appropriate?
Correct Answer
C) +$7,700, measured from the contract date
Why this is correct: price is agreed when the parties meet, so the market the sale reflects is the market at contract. Calculation: 7 × 0.4% = 2.8%; $275,000 × 0.028 = $7,700. Why the other choices are wrong: measuring from closing treats the three-month escrow as though the price were still being negotiated during it; the listing date precedes agreement and no price was set then; the passage of less than a year does not make a measured 2.8% movement disappear.
Why This Is the Correct Answer
Why this is correct: price is agreed when the parties meet, so the market the sale reflects is the market at contract. Calculation: 7 × 0.4% = 2.8%; $275,000 × 0.028 = $7,700. Why the other choices are wrong: measuring from closing treats the three-month escrow as though the price were still being negotiated during it; the listing date precedes agreement and no price was set then; the passage of less than a year does not make a measured 2.8% movement disappear.
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