A comparable cash price is $450,000. Apply a supported total 2% market increase to that price, then a separately supported −$15,000 condition adjustment expressed in effective-date dollars. No other adjustments apply. What adjusted price results?
Correct Answer
B) $444,000
450000×1.02−15000=444000. Common errors: adding the condition adjustment instead of subtracting it gives $474,000; leaving out the condition adjustment gives $459,000; not applying the 2% market increase gives $435,000.
Why This Is the Correct Answer
Option B is correct because $450,000 × 1.02 = $459,000 after the 2% market increase, and $459,000 − $15,000 = $444,000 after the condition adjustment. Applying the market change first and then the current-dollar condition adjustment follows the stated sequence.
Why the Other Options Are Wrong
Option A: $435,000
Option A, $435,000, skips the 2% market increase and only subtracts the condition adjustment ($450,000 − $15,000). The correct result is $450,000 × 1.02 − $15,000 = $444,000.
Option C: $459,000
Option C, $459,000, applies the 2% increase ($450,000 × 1.02) but leaves out the −$15,000 condition adjustment. Subtracting it gives $444,000.
Option D: $474,000
Option D, $474,000, adds the condition adjustment instead of subtracting it ($450,000 × 1.02 + $15,000). The adjustment is negative, so the result is $459,000 − $15,000 = $444,000.
Time first, then features
Bring the price to today's market first, then apply dollar adjustments measured in today's dollars.
How to use: Use this when a problem mixes a market percentage with dollar adjustments.
Exam Tip
Write each step with its sign; the wrong answers usually come from skipping a step or flipping a sign.
Common Mistakes to Avoid
- -Skipping the market conditions adjustment
- -Adding a negative adjustment
- -Leaving out one of the stated adjustments
Concept Deep Dive
Analysis
This question tests applying a percentage market adjustment followed by a dollar condition adjustment. First apply the 2% increase to the $450,000 cash price, then subtract the $15,000 condition adjustment expressed in effective-date dollars. Track both the order and the signs.
Background Knowledge
Percentage and dollar adjustments are often combined in the same analysis. Market conditions adjustments are usually applied first to bring the price to the effective date. Dollar adjustments stated in effective-date dollars are then applied to the time-adjusted price.
Real-World Application
A comparable sold several months ago, and the market has risen 2% since its contract date. The appraiser time-adjusts its price, then applies a current-dollar deduction because it was in better condition than the subject.
More Sales Comparison Questions
Which stated cause of supported value loss is external?
Improvement cost new is $450,000. Separately supported improvement depreciation deductions of $45,000, $25,000, $15,000 are expressly nonoverlapping and not already excluded from cost new. Add supported site value of $125,000, already reflecting any site losses. What total indicated value results?
Which two depreciation categories may each be classified as curable or incurable by comparing the cost to remedy a deficiency with the value gained?
Improvement cost new is $800,000. Separately supported improvement depreciation deductions of $120,000, $80,000, $40,000 are expressly nonoverlapping and not already excluded from cost new. No site is included. What depreciated improvement amount results?
The principle of anticipation in real estate valuation states that:
Which highest-and-best-use criterion addresses whether a proposed use is allowed by zoning and applicable legal restrictions?
Three comparables produce adjusted indications of $312,000, $309,000 and $315,000, requiring gross adjustments of 9%, 14% and 22% respectively. Verification also establishes that the first sale is the closest competitive substitute and its adjustments are better supported than the other two. Which indication deserves the most weight on those facts?
When reconciling value indications from the three approaches to value, an appraiser should:
A property sold at a cash-equivalent price of $1,062,500. Its stabilized annual NOI is $85,000. What is the indicated overall rate?
In reconciliation, an appraiser should:
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Cost Approach
13.6% of exam
Income Approach
8.2% of exam
Related Tools
Previous Question
An adverse off-site influence cannot be remedied by the subject owner through feasible changes to the improvement. Which category fits its supported value loss?
Next Question
A house has ample verified competitive sales, while its cost and rental inputs are less reliable. Which approach should receive most weight?