A comparable property has 2,400 square feet while the subject has 2,200 square feet. If the adjustment is $75 per square foot, what adjustment should be made to the comparable?
Correct Answer
B) -$15,000
The comparable is larger than the subject by 200 square feet (2,400 - 2,200). Since the comparable is superior, a downward adjustment is needed: 200 sq ft × $75 = -$15,000.
Why This Is the Correct Answer
Option B is correct because the comparable property has 200 more square feet than the subject (2,400 - 2,200 = 200 sq ft). Since the comparable is larger and therefore superior to the subject, we must make a downward adjustment to the comparable's sale price. The calculation is 200 sq ft × $75/sq ft = $15,000, and since it's a downward adjustment, it's expressed as -$15,000. This adjustment effectively reduces the comparable's sale price to better reflect what the smaller subject property would sell for.
Why the Other Options Are Wrong
Option A: +$15,000
Option A applies the correct dollar amount ($15,000) but uses the wrong sign. A positive adjustment would suggest the comparable is inferior to the subject, but since the comparable is actually larger (superior), a negative adjustment is required.
Option C: +$200
Option C uses an incorrect calculation, showing only $200 instead of $15,000. This appears to be the square footage difference (200 sq ft) without multiplying by the adjustment rate of $75 per square foot.
Option D: -$200
Option D uses the wrong calculation ($200 instead of $15,000) and would be the result of not properly multiplying the square footage difference by the per-square-foot adjustment rate.
CATS Rule
CATS = Comparable Adjustments To Superior features are negative. When the comparable has a superior feature (larger size, better condition, etc.), subtract from the comparable's price. Think of a cat landing on its feet - superior features bring the comparable's value DOWN to match the subject.
How to use: When you see an adjustment question, first identify which property has the superior feature, then apply CATS - if the Comparable has the superior feature, make a negative Adjustment To account for that Superiority.
Exam Tip
Always calculate the difference by subtracting subject from comparable (Comparable - Subject), then determine the sign based on which property is superior. Write out your calculation step-by-step: difference in feature × adjustment rate × direction (+ or -).
Common Mistakes to Avoid
- -Making adjustments to the subject instead of to the comparable
- -Using the wrong sign - applying positive adjustments when negative is needed
- -Forgetting to multiply the difference by the adjustment rate per unit
Concept Deep Dive
Analysis
This question tests the fundamental concept of sales comparison adjustments in real estate appraisal. When using comparable sales, appraisers must adjust for differences between the comparable property and the subject property to estimate the subject's value. The key principle is that adjustments are always made TO the comparable property's sale price, not to the subject. If the comparable is superior to the subject in any feature, a downward (negative) adjustment is made to account for that superiority. Conversely, if the comparable is inferior to the subject, an upward (positive) adjustment is made.
Background Knowledge
Sales comparison adjustments are fundamental to the sales comparison approach, one of the three main appraisal methods. Adjustments are always made TO the comparable properties to make them more similar to the subject property, allowing for a more accurate value estimate. The direction of adjustment depends on whether the comparable's feature is superior (+) or inferior (-) to the subject's corresponding feature.
Real-World Application
In practice, appraisers use multiple comparables and make numerous adjustments for differences in size, condition, location, amenities, and other factors. The goal is to bracket the subject property's value by adjusting each comparable to be as similar as possible to the subject, then analyzing the adjusted sale prices to estimate the subject's market value.
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