A verified comparable closed at $240,000. The buyer later spent $18,000 replacing its roof. What verified closed sale price should be recorded before any separate supported condition adjustment?
Correct Answer
A) $240,000
The verified transaction price is $240,000. A buyer’s later $18,000 expenditure does not change that historical price or automatically establish a dollar-for-dollar value adjustment. Analyze the sale-time condition and supported market reaction separately.
Why This Is the Correct Answer
Option A is correct because the verified transaction price is $240,000, and that is the price to record. The buyer's later $18,000 roof replacement happened after the sale and does not change the historical price. The appraiser analyzes the property's condition at the time of sale and any supported market reaction separately.
Why the Other Options Are Wrong
Option B: $258,000
Option B, $258,000, is wrong because it adds the buyer's later roof cost to the price: $240,000 + $18,000 = $258,000. The recorded sale price stays at the verified $240,000.
Option C: $222,000
Option C, $222,000, is wrong because it subtracts the roof cost from the price: $240,000 − $18,000 = $222,000. The verified sale price is $240,000, and any condition adjustment is a separate supported step, not a change to the recorded price.
Option D: $18,000
Option D, $18,000, is wrong because it reports only the buyer's later roof expenditure. That amount is not the sale price at all; the verified closed price is $240,000.
Price is frozen at closing
Record the price paid on the day the deal closed. What the buyer spends afterward belongs to a later story, not the sale price.
How to use: Use this when a question mentions repairs or upgrades made after a comparable sold.
Exam Tip
Separate the recorded sale price from any condition adjustment; the first is a verified fact, the second needs market support.
Common Mistakes to Avoid
- -Adding a buyer's post-sale improvement cost to the sale price
- -Treating repair cost as a dollar-for-dollar condition adjustment without market support
- -Rating the comparable's condition as of today instead of as of the sale
Concept Deep Dive
Analysis
This question tests the difference between a verified sale price and later spending by the buyer. The sale price is a historical fact fixed at the transaction, and post-sale improvements do not change it. Any condition difference is handled as a separate, market-supported adjustment.
Background Knowledge
The sale price of a comparable reflects what was paid for the property in its condition at the time of sale. Improvements a buyer makes later are not part of that transaction, and their cost does not automatically equal the market's reaction to the condition difference.
Real-World Application
While verifying a comparable, an appraiser learns the buyer replaced the roof soon after closing. He records the closed price, notes the roof was worn at the time of sale, and supports any condition adjustment with market data rather than the buyer's invoice.
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
A property sold for $360,000. Market evidence indicates a site value of $90,000, the dwelling contains 2,000 square feet, and there are no other components. What is the indicated value of the improvements per square foot?
Next Question
The evidence and assignment expressly support reporting to the nearest $1,000. Round the unrounded indication of $307,400 to that increment. What should be reported?