A comparable property sold for $320,000 but has a garage worth $15,000 that the subject property lacks. What adjustment should be made to the comparable?
Correct Answer
B) -$15,000
Since the comparable is superior to the subject (has a garage the subject lacks), a negative adjustment of $15,000 must be made to the comparable's sale price.
Why This Is the Correct Answer
Option B is correct because the comparable property has a garage worth $15,000 that the subject property lacks, making the comparable superior. Since we adjust the comparable TO match the subject, we must remove the value of the garage by subtracting $15,000 from the comparable's sale price. This negative adjustment accounts for the fact that the comparable sold for more money partly due to having the garage, so we need to estimate what it would have sold for without that feature.
Why the Other Options Are Wrong
Option A: +$15,000
Option A is incorrect because adding $15,000 would be adjusting in the wrong direction. A positive adjustment would be used if the subject property had the garage and the comparable lacked it, but that's the opposite of this scenario.
Option C: $305,000
Option C shows the final adjusted value ($305,000) rather than the adjustment amount itself. While this would be the resulting adjusted sale price after applying the -$15,000 adjustment, the question specifically asks for the adjustment to be made, not the final adjusted price.
Option D: No adjustment needed
Option D is incorrect because an adjustment is clearly needed when there's a significant difference between properties. The garage represents a $15,000 value difference that must be accounted for to make a valid comparison between the subject and comparable properties.
CBS Rule - Comparable Better Subtract
CBS: When the Comparable is Better than the Subject, Subtract the difference. Think of CBS television network - they're 'superior' so you subtract from them to bring them down to the subject's level.
How to use: When you see an adjustment question, first identify which property has the superior feature. If it's the comparable (CBS), subtract. If the subject is superior, add to the comparable to bring it up to the subject's level.
Exam Tip
Always read carefully to identify which property (subject or comparable) has the superior feature, then remember that ALL adjustments are made TO the comparable, never to the subject.
Common Mistakes to Avoid
- -Adjusting in the wrong direction (adding when should subtract)
- -Making adjustments to the subject instead of the comparable
- -Confusing the adjustment amount with the final adjusted sale price
Concept Deep Dive
Analysis
This question tests the fundamental principle of sales comparison adjustments in real estate appraisal. When using the sales comparison approach, appraisers must adjust comparable properties to make them equivalent to the subject property. The key concept is that adjustments are always made TO the comparable, not to the subject. If a comparable property has a feature that makes it superior to the subject property, the appraiser must subtract the value of that feature from the comparable's sale price to determine what the comparable would have sold for without that superior feature.
Background Knowledge
In the sales comparison approach, adjustments are always made TO the comparable properties to make them equivalent to the subject property. When a comparable has a superior feature, a negative adjustment is made; when a comparable lacks a feature the subject has, a positive adjustment is made.
Real-World Application
In practice, appraisers constantly make these adjustments when comparing properties. For example, if appraising a home without a pool and using a comparable with a $20,000 pool, the appraiser would subtract $20,000 from the comparable's sale price to estimate what that property would have sold for without the pool.
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