A comparable sold at a cash-equivalent $425,000. It has a pool that the subject lacks, with a supported $25,000 contribution. It lacks central air that the subject has, with a supported $8,000 contribution. Other differences are controlled. What adjusted comparable price results?
Correct Answer
C) $408,000
Comparable superior pool: subtract $25,000. Comparable lacks the subject’s supported central air contribution: add $8,000. Adjusted price=425000−25000+8000=$408,000. Adding both yields 458000; reversing both yields 442000; subtracting both yields 392000. These are supplied market contributions, not automatically their installation costs.
Why This Is the Correct Answer
Option C is correct because the comparable is superior for the pool, so its $25,000 contribution is subtracted, and inferior for central air, so the $8,000 contribution is added. The adjusted price is $425,000 minus $25,000 plus $8,000, which equals $408,000. These are the supported market contributions supplied in the stem.
Why the Other Options Are Wrong
Option A: $458,000
Option A, $458,000, results from adding both amounts: $425,000 + $25,000 + $8,000. That treats the comparable's pool as something the subject has, when in fact the comparable is superior for the pool and should be adjusted down. The correct result is $425,000 - $25,000 + $8,000 = $408,000.
Option B: $442,000
Option B, $442,000, results from reversing both signs: $425,000 + $25,000 - $8,000. This adjusts the subject's direction instead of the comparable's. The correct result is $425,000 - $25,000 + $8,000 = $408,000.
Option D: $392,000
Option D, $392,000, results from subtracting both amounts: $425,000 - $25,000 - $8,000. The comparable lacks central air that the subject has, so that $8,000 should be added, not subtracted. The correct result is $425,000 - $25,000 + $8,000 = $408,000.
CBS and CIA
Comparable Better, Subtract; Comparable Inferior, Add. Apply each adjustment to the comparable, never to the subject.
How to use: Use this check for every line of a grid before adding up the net adjustment.
Exam Tip
Set up the signs before doing any arithmetic, then compute; the distractors in grid questions are usually the other sign combinations.
Common Mistakes to Avoid
- -Adjusting the subject instead of the comparable, which reverses every sign
- -Adding every feature amount regardless of which property has it
- -Using installation cost instead of market contribution as the adjustment
Concept Deep Dive
Analysis
This question tests the direction of adjustments in a sales grid. Adjustments are made to the comparable to make it resemble the subject: subtract for features the comparable has that the subject lacks, and add for features the subject has that the comparable lacks. The comparable has a pool the subject lacks and lacks central air the subject has, so one adjustment is negative and the other is positive.
Background Knowledge
In the sales comparison approach, adjustments are applied to the comparable sale price to estimate what it would have sold for if it had the subject's characteristics. A comparable that is superior in a feature is adjusted downward, and one that is inferior is adjusted upward. The amounts should reflect supported market contributions rather than installation costs.
Real-World Application
An appraiser is valuing a house with central air but no pool, and the best comparable sold with a pool but no central air. Paired sales support a $25,000 pool contribution and an $8,000 central air contribution. In the grid the appraiser enters -$25,000 for the pool and +$8,000 for central air, giving an adjusted comparable price of $408,000.
More Sales Comparison Questions
An undamaged but functionally inadequate system causes a supported $60,000 loss. Replacement costs $85,000 and restores only $60,000, with no other benefits. What loss classification and deduction fit?
The subject is a 10-year-old dwelling with improvement cost new of $640,000. A highly comparable 7-year-old dwelling recently sold for $580,000; at the sale date its site was worth $150,000 and its improvement cost new was $500,000. Market evidence shows depreciation accruing evenly with actual age. What is the depreciated value of the subject improvements?
Observed sale prices are $450,000, $475,000, $425,000, $500,000, $440,000. Calculate the range (maximum−minimum), to the nearest dollar.
Observed values are 100, 105, 110, 115, 120. Calculate the range (maximum−minimum).
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For an arithmetic illustration, allocate historical construction cost $2,400,000 over 40 years on a zero-salvage equal annual schedule. After 8 years, what scheduled unindexed amount remains? This is not a current market-value conclusion.
For an arithmetic schedule only, allocate historical cost $2,500,000 over 40 years with zero residual. After 8 years, what unindexed scheduled amount remains? This is not an estimate of current market value.
The sale-price range is $45,000 and the maximum is $385,000. Find the minimum price.
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Improvement cost new is $1,800,000. Separately supported improvement depreciation deductions of $200,000, $150,000, $100,000 are expressly nonoverlapping and not already excluded from cost new. No site is included. What depreciated improvement amount results?
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