A comparable sale included $18,000 of furnishings conveyed with the house. Before comparison, the appraiser should:
Correct Answer
D) Remove the supported contribution of the furnishings
Identify the furnishings and remove their supported contribution to the bundled transaction price to isolate the relevant real-estate price. A stated allocation or replacement cost is not automatically that market contribution. Suitability still requires verification and other relevant analysis.
Why This Is the Correct Answer
Option D is correct because when a sale price includes non-real property items, their estimated market value must be removed from the sale price. The appraiser identifies the furnishings and removes their supported contribution to isolate the real estate price. A stated allocation or replacement cost does not by itself equal that market contribution.
Why the Other Options Are Wrong
Option A: Add the furnishings’ replacement cost new to the price
Option A is wrong because it adds the furnishings' replacement cost new to the price. Furnishings are personal property whose contribution must be removed, not added, and replacement cost new is not their market contribution.
Option B: Silently treat the whole bundle as real estate
Option B is wrong because it silently treats the whole bundle as real estate. Including personal property in the price overstates the real estate value and leaves the reader unaware of the issue.
Option C: Reject the sale because it included personal property
Option C is wrong because it rejects the sale because it included personal property. The sale can still be used once the personal property contribution is identified and removed, along with other normal verification.
Furniture out, real estate in
Before comparing, take out what is not real estate so you compare house to house.
How to use: Use this when a comparable or subject sale includes furniture or other personal property.
Exam Tip
Choose the answer that removes the supported market contribution of personal property, not its cost or a stated allocation.
Common Mistakes to Avoid
- -Using replacement cost or a contract allocation as the personal property deduction without support
- -Leaving personal property in the comparable's price
- -Rejecting a usable sale because it included personal property
Concept Deep Dive
Analysis
This question tests how to handle personal property included in a comparable sale. Furnishings are not real estate, so their contribution to the price must be identified and removed before the sale is compared with the subject. The amount removed should be the supported market contribution, not simply a stated figure or replacement cost.
Background Knowledge
Appraisals of real property value the real estate, so items such as furniture, equipment or vehicles included in a sale must be separated from the price. Used furnishings typically contribute far less than their original or replacement cost, so the market contribution needs support.
Real-World Application
A vacation-area comparable sold fully furnished, and the contract listed an amount for furniture. The appraiser checks sales of used furnishings and similar furnished and unfurnished sales, then removes the supported contribution before adjusting the comparable.
More Sales Comparison Questions
Supported adjustments are: non-market financing $10,000, GLA $36/sf, garage $3,500 per car, pool/spa $12,500. A comparable identical to the 2,800 sf subject sold for $267,000 with non-market financing. What is its adjusted price?
Using GLA $36/sf and non-market financing $10,000: a 3,100 sf comparable sold for $277,000 with non-market financing; the subject has 2,800 sf. Bath count differences are not adjusted. What is the adjusted price?
Using garage $3,500 per car and pool/spa $12,500: a comparable with a 2-car garage and a pool/spa sold for $268,000. The subject has a 3-car garage and no pool. What is the adjusted price?
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