A comparable needed adjustments of −$10,000 and −$10,800. Another needed +$3,500 and −$12,500. Which needed the larger absolute gross adjustment?
Correct Answer
A) The first, at $20,800
Absolute gross adjustment adds the adjustments without regard to sign: $10,000 + $10,800 = $20,800 for the first, and $3,500 + $12,500 = $16,000 for the second. The −$9,000 figure is the second sale’s net adjustment.
Why This Is the Correct Answer
Option A is correct because the first comparable's gross adjustment is $10,000 + $10,800 = $20,800, while the second's is $3,500 + $12,500 = $16,000. The first therefore needed the larger absolute gross adjustment.
Why the Other Options Are Wrong
Option B: The second, at $16,000
Option B, the second at $16,000, uses the correct gross figure for the second comparable but picks the smaller total as larger. The first comparable's gross of $10,000 + $10,800 = $20,800 exceeds $16,000.
Option C: They are equal at $9,000
Option C, equal at $9,000, appears to take the second sale's net amount ($3,500 − $12,500 = −$9,000, shown without its sign) and assume the first matches. The gross totals are $20,800 and $16,000, which are not equal.
Option D: The second, at −$9,000 net
Option D, the second at −$9,000 net, reports the second sale's net adjustment ($3,500 − $12,500 = −$9,000) instead of a gross figure. The question asks about gross, where the first comparable's $20,800 is larger than the second's $16,000.
Gross ignores the minus signs
To find gross, drop each minus sign and add the numbers.
How to use: Use this when comparing gross adjustments across comparables.
Exam Tip
When a question asks for gross, any negative figure in an answer choice is a net figure and does not answer the question.
Common Mistakes to Avoid
- -Using net adjustment when gross is asked
- -Letting offsetting adjustments reduce the gross total
- -Comparing the wrong totals between comparables
Concept Deep Dive
Analysis
This question tests calculation of absolute gross adjustment and comparison between two comparables. Gross adjustment adds the magnitudes of all adjustments regardless of sign, so each comparable's total is computed separately and then compared.
Background Knowledge
Absolute gross adjustment is the sum of the absolute values of all adjustments made to a sale. It is a common guide to comparability, with lower gross adjustments often indicating a more similar comparable. Net adjustment, by contrast, lets upward and downward amounts offset.
Real-World Application
An appraiser compares two comparables during reconciliation. The first has two downward adjustments totaling $20,800 gross, while the second has offsetting adjustments with a gross of $16,000, and the appraiser considers this along with other factors when weighting the sales.
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?
Using GLA $36/sf, garage $3,500 per car and pool/spa $12,500: a 2,600 sf comparable with a 2-car garage and a pool/spa sold for $264,000. The subject is 2,800 sf with a 3-car garage and no pool. What is the adjusted price?
In a neighborhood with declining values and marketing times over six months, what must Fannie Mae lenders confirm about the sales comparison analysis?
A house is a 4,000 square foot home in an area of 2,000 square foot homes. How must the appraiser treat this over-improvement in the sales comparison grid?
According to the Interagency Appraisal and Evaluation Guidelines, which items should an appraisal’s market conditions discussion include?
A comparable listed at $420,000 and sold for $399,000. What sale-to-list price ratio (sale price ÷ list price) does this indicate?
An appraiser wants to describe the neighborhood boundaries in a Fannie Mae report. Which approach is acceptable?
Which of these is listed by Fannie Mae as a sales or financing concession?
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