A comparable sold for $450,000. Verified market evidence shows a contribution of $8,000 for its two-car garage and $12,000 for the subject’s three-car garage. There are no other differences. What garage adjustment applies to the comparable?
Correct Answer
D) Add $4,000
The garage contributions differ by 12000−8000=$4,000. The subject is superior, so add $4,000 to the comparable. Adding $12,000 or removing $8,000 alone would ignore one component rather than adjust their difference. These are market-supported contributions, not assumed installation costs.
Why This Is the Correct Answer
Option D is correct because the subject's three-car garage contributes $12,000 and the comparable's two-car garage contributes $8,000, a difference of $12,000 - $8,000 = $4,000. The comparable is inferior, so $4,000 is added to its price.
Why the Other Options Are Wrong
Option A: Add $12,000
Option A, add $12,000, uses the full contribution of the subject's three-car garage and ignores the $8,000 the comparable's own two-car garage already contributes. Only the $4,000 difference is adjusted.
Option B: Subtract $8,000
Option B, subtract $8,000, removes the comparable's garage contribution and ignores the subject's $12,000 garage. It also moves in the wrong direction; the comparable is inferior, so $4,000 is added.
Option C: Subtract $4,000
Option C, subtract $4,000, uses the right amount ($12,000 - $8,000) but the wrong direction. The comparable's garage is inferior to the subject's, so the adjustment is added.
Adjust the gap, not the whole
When both homes have the feature, adjust only the difference between what each version contributes.
How to use: Use this for garage, bathroom or other feature upgrade questions.
Exam Tip
First find the difference between the two contributions, then set the direction by asking whether the comparable is better or worse.
Common Mistakes to Avoid
- -Adjusting by the full value of the subject's feature
- -Reversing the direction for an inferior comparable
- -Using construction cost instead of market contribution
Concept Deep Dive
Analysis
This question tests adjusting for a feature difference using contributory values. The adjustment equals the difference between the subject's and comparable's garage contributions, and the direction depends on which property is superior.
Background Knowledge
Adjustments reflect contributory value, meaning what a feature adds to market value, which may differ from its cost. When both properties have a version of a feature, the adjustment is the difference in contributions, added when the comparable is inferior and subtracted when it is superior.
Real-World Application
An appraiser's paired sales show two-car garages contribute about $8,000 and three-car garages about $12,000 in a subdivision. A comparable with a two-car garage is adjusted up $4,000 to match a subject with a three-car garage.
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