A comparable requires a +$14,000 GLA adjustment and a −$9,000 condition adjustment. Its net adjustment is:
Correct Answer
A) +$5,000, with gross adjustments of $23,000
Why this is correct: Net adjustment is the algebraic sum: +14,000 + (-9,000) = +5,000. Gross adjustment is the sum of the absolute values: |+14,000| + |-9,000| = 23,000. Both figures are reported to show the total adjustment activity and the net effect. Why the other choices are wrong: The net is +$5,000, not +$23,000 or -$5,000. The adjustments offset partially, but the net is not zero. Exam tip: Net adjustment = sum of all adjustments. Gross adjustment = sum of the absolute values of all adjustments.
Why This Is the Correct Answer
Adding with signs gives $14,000 minus $9,000, which equals a net of plus $5,000 applied to the comparable's sale price. Adding absolute values gives $14,000 plus $9,000, which equals a gross of $23,000 in total adjustment activity. Reporting both is standard practice because lenders and reviewers use gross adjustment percentages as a screen for comparable quality. Only one option pairs both figures correctly.
Why the Other Options Are Wrong
Option B: +$23,000, with gross adjustments of $5,000
This reverses the two concepts, labeling $23,000 as the net and $5,000 as the gross. Gross can never be smaller than the absolute value of net, since gross sums magnitudes while net allows cancellation, so the pairing is impossible on its face. Catching that relationship lets you eliminate the option without doing any arithmetic.
Option C: −$5,000, since condition dominates size
There is no rule that condition outweighs size; each adjustment is derived from market evidence and carries only the magnitude that evidence supports. The size adjustment here is the larger of the two, so if either dominated it would be that one. The choice substitutes an invented hierarchy of adjustment categories for simple addition.
Option D: $0, since the two adjustments offset
The two adjustments partially offset but do not cancel, because $14,000 and $9,000 are not equal. Reading offset as a synonym for cancel is the error. Even if they had netted to zero, the gross adjustment of $23,000 would still need to be reported and would still signal a poorly matched comparable.
Signs for Net, Sizes for Gross
Net keeps the plus and minus signs and lets them fight each other. Gross strips the signs off and adds the raw sizes. Gross is always at least as large as the absolute value of net, and usually larger.
How to use: Compute both numbers before looking at the options, then eliminate any option where the stated gross is smaller than the stated net. That single check usually removes half the choices instantly.
Exam Tip
A small net paired with a large gross is the exam's way of hinting that a comparable is weak. If a question asks which comparable deserves most weight, prefer the one with the lowest gross adjustment, not the lowest net.
Common Mistakes to Avoid
- -Reporting gross adjustment with signs included
- -Treating a small net adjustment as proof that a comparable is well matched
- -Applying adjustments to the subject rather than to the comparable
Concept Deep Dive
Analysis
Every adjustment grid reports two different totals, and they answer different questions. The net adjustment is the algebraic sum of all adjustments, keeping signs, and it tells you how far the comparable's price moves and in which direction. The gross adjustment is the sum of the absolute values of all adjustments, ignoring signs, and it measures how much total correcting the comparable required, which is a proxy for how similar it really was to the subject. A comparable can have a tiny net and an enormous gross if large positive and negative adjustments cancel, and that combination is a warning sign rather than a virtue. Here the two adjustments are plus $14,000 for gross living area and minus $9,000 for condition, so the net is plus $5,000 and the gross is $23,000.
Background Knowledge
You need the mechanics of the adjustment grid, the sign convention that a comparable inferior to the subject is adjusted upward while a superior comparable is adjusted downward, and the definitions of net and gross adjustment. Familiarity with typical lender guidelines on adjustment magnitudes helps you see why gross is tracked at all.
Real-World Application
An appraiser grids three sales and finds one with a plus $30,000 size adjustment and a minus $28,000 quality adjustment, a net of only $2,000 on a $400,000 sale. She flags the 14.5 percent gross adjustment, gives that sale the least weight in reconciliation, and explains in the report why the near-zero net is not evidence of comparability.
More Sales Comparison Questions
Excess land differs from surplus land in that excess land:
A paired sales analysis reveals that homes with stainless-steel appliances sell for $2,100 more than identical homes with standard appliances — but only when the homes are priced below $350,000. In the subject’s neighborhood, median sale price is $410,000. What is the appraiser’s obligation regarding the $2,100 appliance adjustment?
GLA differs by 210 sq ft between subject and comparable. Paired sales support $65 per sq ft of living area. The line adjustment is:
Paired sales are drawn from transactions six months apart in a stable market. The time adjustment needed is:
The most appropriate unit of comparison is determined by:
A comparable superior to the subject in every adjusted category should produce an indication that is:
Three sales support $520,000; the borrower's purchase contract is $505,000. May the appraisal conclude above the contract price?
A comparable sold for $300,000 with the seller carrying a loan 2 points below market, a benefit worth $8,000. What is its cash-equivalent price?
Why is a foreclosure sale generally a poor comparable in a stable market?
A comparable sold 8 months ago for $250,000 in a market appreciating 6% per year. What is the time-adjusted price?
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Previous Question
The subject sits just inside a top-rated school attendance zone; an otherwise perfect comparable sits two blocks away, outside it. That comparable:
Next Question
In a sales comparison analysis, an appraiser applies a +$24,500 adjustment for a swimming pool to Comparable A, then later applies a −$18,200 adjustment for inferior HVAC to the same comparable. The appraiser reports a net adjustment of +$6,300. During peer review, it is noted that the pool adjustment was derived from a single sale pair involving a luxury estate, while the HVAC adjustment came from a cluster of mid-range transactions. What is the primary analytical deficiency?