A comparable property sold for $350,000 but has a swimming pool worth $15,000 that the subject property lacks. What is the adjusted sale price for comparison purposes?
Correct Answer
B) $335,000
Since the comparable has a superior feature (pool) that the subject lacks, subtract the value from the comparable's sale price: $350,000 - $15,000 = $335,000.
Why This Is the Correct Answer
Option B ($335,000) is correct because it properly applies the adjustment principle. Since the comparable property has a swimming pool worth $15,000 that the subject property does not have, this represents a superior feature in the comparable. To make the comparable truly comparable to the subject, we must subtract the $15,000 pool value from the comparable's $350,000 sale price. This gives us $350,000 - $15,000 = $335,000 as the adjusted sale price.
Why the Other Options Are Wrong
Option A: $365,000
Option A incorrectly adds the pool value to the sale price ($350,000 + $15,000 = $365,000), which would be appropriate if the subject property had the pool and the comparable lacked it, but that's the opposite of the actual situation.
Option C: $350,000
Option C makes no adjustment at all, leaving the sale price at $350,000, which fails to account for the significant difference between the properties and would result in an overvaluation of the subject property.
Option D: $340,000
Option D shows $340,000, which represents only a $10,000 adjustment rather than the full $15,000 value of the pool, resulting in an incomplete adjustment that would still overvalue the subject property.
The COMPASS Rule
COMPASS: Comparable Over Subject = Subtract. When the Comparable has something Over (superior to) the Subject, you Subtract. When the Subject has something over the Comparable, you add.
How to use: When you see an adjustment question, immediately identify which property has the superior feature, then apply COMPASS - if the comparable is superior, subtract the adjustment from the comparable's price.
Exam Tip
Always read carefully to identify which property has the feature in question, then remember that adjustments are always made to the comparable's sale price, never to the subject property.
Common Mistakes to Avoid
- -Adding instead of subtracting when the comparable is superior
- -Making adjustments to the subject property instead of the comparable
- -Failing to make any adjustment when significant differences exist
Concept Deep Dive
Analysis
This question tests the fundamental principle 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 concept is that adjustments are always made TO the comparable property, not the subject property. If the comparable has a superior feature that the subject lacks, the value of that feature must be subtracted from the comparable's sale price to make it truly comparable to the subject.
Background Knowledge
Sales comparison adjustments follow the principle that all adjustments are made TO the comparable property to make it equivalent to the subject property. When a comparable has a superior feature, subtract its value; when the comparable lacks a feature that the subject has, add the value of that feature.
Real-World Application
In practice, appraisers regularly encounter situations where comparables have different amenities like pools, garages, or upgraded kitchens. Each difference requires careful analysis and adjustment to ensure the final value opinion accurately reflects what the subject property would sell for in the current market.
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