A comparable sold for $255,000 between related parties. Arm’s-length sales of similar properties indicate $278,000. What conditions-of-sale adjustment applies to the comparable?
Correct Answer
D) +$23,000
Why this is correct: the sale is below market because the parties were not bargaining at arm’s length, so the comparable is adjusted up to what an unrelated buyer would have paid. Calculation: $278,000 - $255,000 = +$23,000. Why the other choices are wrong: -$23,000 has the sign reversed and pushes an already low sale lower; +$11,500 halves the measured difference for no stated reason; a price agreed between related parties is precisely the case where the price is not the best evidence of market value.
Why This Is the Correct Answer
Why this is correct: the sale is below market because the parties were not bargaining at arm’s length, so the comparable is adjusted up to what an unrelated buyer would have paid. Calculation: $278,000 - $255,000 = +$23,000. Why the other choices are wrong: -$23,000 has the sign reversed and pushes an already low sale lower; +$11,500 halves the measured difference for no stated reason; a price agreed between related parties is precisely the case where the price is not the best evidence of market value.
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