A comparable has a garage that the subject lacks. Verified market analysis supports an $8,000 contribution for this entire garage, with all other influences equal. What signed quality-neutral physical adjustment applies to the comparable?
Correct Answer
D) −$8,000
The comparable has an additional supported 8000 contribution; adjustment toward the subject = −8000. Common errors: adjusting upward instead of downward gives $8,000; concluding that no adjustment is needed gives $0; deducting the garage contribution twice gives −$16,000.
Why This Is the Correct Answer
Option D is correct because the comparable has an entire garage that the subject lacks, and the market supports an $8,000 contribution. Removing that advantage from the comparable gives an adjustment of −$8,000.
Why the Other Options Are Wrong
Option A: −$16,000
Option A, −$16,000, deducts the garage contribution twice (2 × $8,000 = $16,000). The garage is one feature with a supported $8,000 contribution, so the adjustment is −$8,000.
Option B: $8,000
Option B, $8,000, adjusts upward instead of downward. Because the comparable is superior (it has the garage), its price must be reduced by $8,000, giving −$8,000.
Option C: $0
Option C, $0, concludes that no adjustment is needed even though the market supports an $8,000 contribution for the garage. The comparable's extra garage must be adjusted for: −$8,000.
CBS: Comp Better, Subtract
When the comparable has something the subject lacks, it is better, so subtract the feature's contribution.
How to use: Use this to decide the sign of a feature adjustment on a sales grid.
Exam Tip
Ask which property has the feature; if it is the comparable, the adjustment is negative.
Common Mistakes to Avoid
- -Adding the contribution to a superior comparable
- -Counting the feature's contribution twice
- -Skipping a supported adjustment
Concept Deep Dive
Analysis
This question tests the sign and amount of an adjustment for a feature the comparable has but the subject lacks. Adjustments are made to the comparable to make it like the subject. A superior comparable is adjusted downward by the supported contribution.
Background Knowledge
Adjustments in the sales comparison approach are applied to the comparable's price to estimate what it would have sold for if it were like the subject. A feature the comparable has but the subject lacks calls for a downward adjustment equal to the market-supported contribution.
Real-World Application
The subject has only off-street parking, while a comparable has a detached garage. Paired sales support an $8,000 contribution, so the appraiser enters −$8,000 for the comparable's garage.
More Sales Comparison Questions
An undamaged but functionally inadequate system causes a supported $60,000 loss. Replacement costs $85,000 and restores only $60,000, with no other benefits. What loss classification and deduction fit?
The subject is a 10-year-old dwelling with improvement cost new of $640,000. A highly comparable 7-year-old dwelling recently sold for $580,000; at the sale date its site was worth $150,000 and its improvement cost new was $500,000. Market evidence shows depreciation accruing evenly with actual age. What is the depreciated value of the subject improvements?
Observed sale prices are $450,000, $475,000, $425,000, $500,000, $440,000. Calculate the range (maximum−minimum), to the nearest dollar.
Observed values are 100, 105, 110, 115, 120. Calculate the range (maximum−minimum).
For an arithmetic illustration only, depreciate a historical $2,000,000 construction cost on a zero-salvage straight-line 40-year schedule for 10 years. What unindexed scheduled amount remains? This is not a conclusion of current market value or current replacement cost.
For an arithmetic illustration, allocate historical construction cost $2,400,000 over 40 years on a zero-salvage equal annual schedule. After 8 years, what scheduled unindexed amount remains? This is not a current market-value conclusion.
For an arithmetic schedule only, allocate historical cost $2,500,000 over 40 years with zero residual. After 8 years, what unindexed scheduled amount remains? This is not an estimate of current market value.
The sale-price range is $45,000 and the maximum is $385,000. Find the minimum price.
A property is purchased for $1,500,000 with a loan of $1,200,000. Using the purchase price as the value, what is the loan-to-value ratio, as a percentage to one decimal?
Improvement cost new is $1,800,000. Separately supported improvement depreciation deductions of $200,000, $150,000, $100,000 are expressly nonoverlapping and not already excluded from cost new. No site is included. What depreciated improvement amount results?
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