A comparable property sold for $350,000 but has a two-car garage while the subject has a one-car garage. If a garage bay is worth $8,000, what adjustment should be made to the comparable?
Correct Answer
B) Subtract $8,000 from the comparable
Since the comparable is superior to the subject (two-car vs. one-car garage), we subtract $8,000 from the comparable's sale price to make it equivalent to the subject property.
Why This Is the Correct Answer
Option B is correct because the comparable property has a superior feature (two-car garage vs. one-car garage). Since the comparable is better than the subject by one garage bay worth $8,000, we must subtract $8,000 from the comparable's sale price. This adjustment removes the value of the extra garage bay, making the comparable equivalent to the subject property. The adjusted comparable price would be $342,000 ($350,000 - $8,000).
Why the Other Options Are Wrong
Option A: Add $8,000 to the comparable
Adding $8,000 to the comparable would be incorrect because it would make the superior comparable even more valuable, moving it further away from equivalency with the subject rather than toward it.
Option C: Add $16,000 to the comparable
Adding $16,000 assumes we need to account for two garage bays when only one bay difference exists between the properties, and it incorrectly adds value to an already superior comparable.
Option D: Subtract $16,000 from the comparable
Subtracting $16,000 uses the correct direction (subtraction for superior comparable) but applies the wrong amount, as there is only one garage bay difference worth $8,000, not two bays worth $16,000.
CBS Rule - Comparable Better Subtract
CBS: When the Comparable is Better than the Subject, Subtract the difference. Think of CBS television network - they're 'subtracting' or cutting programs when they cancel shows.
How to use: When you see an adjustment question, first identify which property is better. If the comparable is better (CBS), subtract. If the subject is better, add to the comparable to bring it up to the subject's level.
Exam Tip
Always read carefully to identify which property has the superior feature, then remember that adjustments are ALWAYS made to the comparable's sale price, never to the subject.
Common Mistakes to Avoid
- -Adjusting in the wrong direction (adding when should subtract)
- -Using the wrong dollar amount (confusing total garage value vs. difference value)
- -Trying to adjust the subject property instead of the comparable
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 estimate the subject's value. The key concept is that adjustments are always made TO the comparable property's sale price, not to the subject. When a comparable property is superior to the subject (has better features), you subtract the value of that superior feature from the comparable's sale price to make it equivalent to the subject.
Background Knowledge
Sales comparison adjustments follow the principle that all adjustments are made to the comparable property's sale price to make it equivalent to the subject property. When a comparable has superior features, subtract the value of those features; when a comparable has inferior features, add the value of what's missing.
Real-World Application
In practice, appraisers create adjustment grids comparing multiple sales to the subject property. Each comparable gets adjusted for all differences (size, condition, location, features) to arrive at an indicated value range for the subject property.
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