A comparable property sold for $450,000 and has a swimming pool valued at $15,000 that the subject property lacks. What adjustment should be made to the comparable?
Correct Answer
D) Subtract $15,000 from the comparable's sale price
Why this is correct: In the sales comparison approach, adjustments are made to the comparable's sale price to align it with the subject. When the comparable has a superior feature (a $15,000 pool) that the subject lacks, you subtract that value from the comparable's price. Why the other choices are wrong: Adding $15,000 to the subject property value misapplies the adjustment direction. No adjustment is necessary ignores a clear value difference. Adding $15,000 to the comparable's sale price would further widen the difference, making the adjustment incorrect. Exam tip: Always adjust from the comparable to the subject. If the comp is better, subtract; if worse, add.
Why This Is the Correct Answer
Option B is correct because when the comparable has a superior feature (swimming pool worth $15,000) that the subject property lacks, we must subtract that value from the comparable's sale price. This adjustment makes the comparable equivalent to the subject property by removing the value of the feature the subject doesn't have. The logic is that if the comparable didn't have the pool, it would have sold for $15,000 less, making it more directly comparable to the subject property.
Why the Other Options Are Wrong
The CBS Rule
CBS = Comparable Better, Subtract. When the Comparable is Better than the subject (has superior features), you Subtract the value of those features from the comparable's sale price.
How to use: When you see a question about adjustments, immediately identify which property has the superior feature. If it's the comparable, use CBS - subtract the feature's value from the comparable's price.
Exam Tip
Always remember that adjustments flow TO the comparables, never to the subject property. The subject is your baseline - you're adjusting the comparables to match the subject.
Common Mistakes to Avoid
- -Adjusting the subject property instead of the comparable
- -Adding value when you should subtract (or vice versa)
- -Forgetting to make adjustments when material differences exist
Concept Deep Dive
Analysis
This question tests the fundamental principle of comparative market analysis adjustments in real estate appraisal. The sales comparison approach requires making adjustments to comparable properties to account for differences between them and the subject property. When a comparable property has a superior feature that the subject property lacks, the appraiser must adjust the comparable's sale price downward to reflect what it would have sold for without that feature. This process ensures that all comparables are adjusted to be as similar as possible to the subject property for accurate valuation.
Background Knowledge
The sales comparison approach requires adjusting comparable sales to account for differences with the subject property. All adjustments are made to the comparables, never to the subject property, which serves as the baseline for comparison.
Real-World Application
In practice, appraisers regularly encounter situations where comparables have features like pools, upgraded kitchens, or additional bathrooms that the subject lacks. They must research the contributory value of these features in the local market and subtract these amounts from the comparable sales prices to arrive at accurate adjusted sale prices for their analysis.
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