A comparable with a cash-equivalent price of $350,000 requires current-dollar adjustments of +$20,000 and −$15,000. No other adjustments apply. What is the adjusted price?
Correct Answer
B) $355,000
350000+20000-15000=355000. Common errors: adding the −$15,000 instead of subtracting it gives $385,000; subtracting the +$20,000 instead of adding it gives $315,000; leaving out the −$15,000 gives $370,000.
Why This Is the Correct Answer
Option B is correct because 350,000 + 20,000 − 15,000 = $355,000. Each signed adjustment is applied as given to the comparable's cash-equivalent price. The net adjustment is +$5,000.
Why the Other Options Are Wrong
Option A: $315,000
Option A, $315,000, is wrong because it subtracts the +$20,000 instead of adding it: 350,000 − 20,000 − 15,000 = 315,000. The correct calculation is 350,000 + 20,000 − 15,000 = $355,000.
Option C: $370,000
Option C, $370,000, is wrong because it applies only the +$20,000 and leaves out the −$15,000: 350,000 + 20,000 = 370,000. Subtracting the $15,000 gives $355,000.
Option D: $385,000
Option D, $385,000, is wrong because it adds the −$15,000 instead of subtracting it: 350,000 + 20,000 + 15,000 = 385,000. The correct result is 350,000 + 20,000 − 15,000 = $355,000.
Follow the signs exactly
Plus means add to the comparable, minus means subtract; total them for the net adjustment.
How to use: Use this to check grid arithmetic before choosing an answer.
Exam Tip
Compute the net adjustment first, then apply it to the price to avoid sign errors.
Common Mistakes to Avoid
- -Reversing the sign of an adjustment
- -Leaving out one of the adjustments
- -Applying adjustments to the subject instead of the comparable
Concept Deep Dive
Analysis
This question tests applying signed dollar adjustments on a sales grid. Each adjustment is added or subtracted according to its sign. Starting at $350,000, add $20,000 and subtract $15,000.
Background Knowledge
Adjustments are made to the comparable property, not the subject. A positive adjustment means the comparable is inferior in that feature, and a negative adjustment means it is superior. The adjusted price is the sale price plus the net of all signed adjustments.
Real-World Application
On a grid, a comparable gets +$20,000 for a smaller living area and −$15,000 for a pool the subject lacks. The appraiser nets these to +$5,000 and reports an adjusted price of $355,000. Each adjustment is supported by market data described in the report.
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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