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
D) Subtract $8,000 from the comparable
Why this is correct: The adjustment is made to the comparable's sale price to make it equivalent to the subject. The comparable is superior (has an extra garage bay worth $8,000). Therefore, we subtract value from the comparable to account for this superiority. The calculation is a direct subtraction of $8,000. Why the other choices are wrong: 'Subtract $16,000 from the comparable' is wrong; that would be the adjustment if the subject had no garage and the comparable had two bays. 'Add $8,000 to the comparable' is incorrect; adding would make the comparable even more superior. 'Add $16,000 to the comparable' is also wrong for the same reason. Exam tip: Always adjust from the comparable to the subject. If the comparable is better, subtract; if worse, add.
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
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.
More Sales Comparison Questions
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A comparable sale occurred 8 months ago for $425,000. Market conditions indicate property values have increased 0.5% per month since that time. What is the adjusted sale price?
A property generates $150,000 in potential gross income. Market data indicates a 7% vacancy rate and operating expenses of 35% of effective gross income. If the cap rate is 9.5%, what is the indicated value?
A property sold for $320,000 one year ago. If market conditions have improved by 6% since that sale, what is the time-adjusted sale price for comparison purposes?
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