A comparable property is superior to the subject property in location, requiring a $15,000 downward adjustment. The comparable also has an inferior garage, requiring a $5,000 upward adjustment. If the comparable sold for $320,000, what is the adjusted sale price?
Correct Answer
A) $310,000
Why this is correct: Adjust the comparable to the subject. If the comparable is superior, subtract value. If inferior, add value. Net adjustment = (-$15,000 for superior location) + (+$5,000 for inferior garage) = -$10,000. Adjusted price = $320,000 - $10,000 = $310,000. Why the other choices are wrong: $330,000 results from adding both adjustments. $300,000 subtracts both. $340,000 adds the location adjustment and subtracts the garage adjustment. Exam tip: Use the phrase 'CIA': Comparable Is Add? If the comparable is better than the subject, you subtract (downward adjustment) to make it equivalent.
Why This Is the Correct Answer
Option A is correct because it properly applies the adjustment methodology. The comparable's superior location requires a $15,000 downward adjustment, and the inferior garage requires a $5,000 upward adjustment. The net adjustment is -$15,000 + $5,000 = -$10,000. Applying this to the sale price: $320,000 - $10,000 = $310,000. This follows the principle that adjustments are made to the comparable to make it equivalent to the subject property.
Why the Other Options Are Wrong
Option B: $330,000
This answer incorrectly adds the net adjustment instead of subtracting it, resulting in $320,000 + $10,000 = $330,000. This fundamental error reverses the adjustment direction.
Option C: $300,000
This answer appears to subtract both adjustments from the sale price ($320,000 - $15,000 - $5,000 = $300,000), failing to recognize that the garage adjustment should be added back since it's inferior to the subject.
Option D: $340,000
This answer incorrectly adds both individual adjustments to the sale price ($320,000 + $15,000 + $5,000 = $340,000), completely reversing the adjustment logic for both features.
SUIT Method
SUIT: Superior features = Subtract (downward adjustment), Inferior features = Add (upward adjustment). Remember: 'If the comparable SUperior, SUbtract; if Inferior, add IT up.'
How to use: When you see adjustment problems, immediately identify whether each comparable feature is superior or inferior to the subject, then apply SUIT: Superior = Subtract, Inferior = Add. Calculate net adjustment, then apply to sale price.
Exam Tip
Always double-check your adjustment direction - this is the most common error. Write 'S=S' (Superior=Subtract) and 'I=A' (Inferior=Add) on your scratch paper as a quick reference.
Common Mistakes to Avoid
- -Reversing adjustment directions (adding when should subtract)
- -Forgetting to net the adjustments before applying to sale price
- -Making adjustments to the subject property instead of the comparable
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 arrive at an accurate value indication. The key principle is that adjustments are always made TO the comparable property to make it more like the subject property. Superior features in the comparable require downward adjustments (reducing the sale price), while inferior features require upward adjustments (increasing the sale price).
Background Knowledge
Sales comparison adjustments are made TO the comparable property to account for differences with the subject property. Superior features in comparables require downward adjustments, while inferior features require upward adjustments. The goal is to determine what the comparable would have sold for if it were identical to the subject property.
Real-World Application
In practice, appraisers make dozens of adjustments for features like location, size, condition, amenities, and age. Each adjustment must be carefully considered and documented, with the appraiser explaining both the amount and direction of each adjustment in the appraisal report.
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