A comparable property sold for $450,000 and has a two-car garage, while the subject property 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
Since the comparable is superior to the subject (two-car vs one-car garage), we subtract the value difference from the comparable's sale price. The comparable should be adjusted downward by $8,000.
Why This Is the Correct Answer
Option B is correct because the comparable property has a superior feature (two-car garage) compared to the subject property (one-car garage). Since the comparable is better than the subject by one garage bay worth $8,000, we must subtract this amount from the comparable's sale price. This adjustment makes the comparable more similar to the subject property for comparison purposes. The logic is: if the comparable had only a one-car garage like the subject, it would have sold for $8,000 less.
Why the Other Options Are Wrong
Option A: Add $8,000
Adding $8,000 would be incorrect because it assumes the subject property is superior to the comparable, which is the opposite of the actual situation. This would make the comparable appear even more valuable, moving it further away from the subject's characteristics rather than adjusting for the difference.
Option C: Add $16,000
Adding $16,000 is incorrect because it both goes in the wrong direction (adding instead of subtracting) and uses the wrong amount. The difference is only one garage bay ($8,000), not two garage bays ($16,000). This error compounds the directional mistake with an incorrect calculation.
Option D: No adjustment needed
No adjustment is clearly needed because there is a measurable difference between the properties (two-car vs one-car garage) that affects value. Ignoring this difference would result in an inaccurate comparison and potentially mislead the appraisal conclusion.
SIS Rule
SIS = Superior comparable, Inferior comparable, Subject stays the same. When comparable is Superior to subject: Subtract. When comparable is Inferior to subject: Add. The Subject value never changes - only the comparable gets adjusted.
How to use: When you see a comparison question, first identify which property is superior for the feature in question. If the comparable is superior (better than the subject), use SIS and subtract. If the comparable is inferior (worse than the subject), add the adjustment amount.
Exam Tip
Always read carefully to identify which property has the superior feature, then remember that adjustments always go TO the comparable property. Write 'C→S' (comparable to subject) on your scratch paper to remind yourself of the adjustment direction.
Common Mistakes to Avoid
- -Adjusting in the wrong direction (adding when should subtract)
- -Applying adjustments to the subject property instead of the comparable
- -Using the total garage value instead of the difference value
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, not to the subject. When a comparable property is superior to the subject property in any feature, the comparable's sale price must be adjusted downward to reflect what it would have sold for if it had the same inferior feature as the subject.
Background Knowledge
In the sales comparison approach, adjustments are made to comparable properties to account for differences with the subject property. The fundamental rule is: if the comparable is superior, subtract the difference; if the comparable is inferior, add the difference. All adjustments are made to the comparable's sale price, never to the subject property.
Real-World Application
In practice, appraisers regularly encounter properties with different garage configurations. A two-car garage typically adds significant value over a one-car garage due to increased storage and convenience. Appraisers must research local market data to determine the value difference per garage bay, then apply consistent adjustments across all comparables to ensure accurate valuation.
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