Comparable cash price is $288,000. The subject has 1,000 sf MORE site area at a supported marginal $7/sf, and 80 sf LESS GLA at a supported marginal $72/sf. Rates apply only to the stated differences. What adjusted price results?
Correct Answer
B) $289,240
288000+1000×7−80×72=289240. Common errors: adding the GLA adjustment instead of subtracting it gives $300,760; subtracting the site adjustment instead of adding it gives $275,240; leaving out the GLA adjustment gives $295,000.
Why This Is the Correct Answer
Option B is correct because the comparable is adjusted upward for its smaller site and downward for its larger living area. The math is $288,000 + (1,000 × $7) − (80 × $72) = $288,000 + $7,000 − $5,760 = $289,240. Both rates apply only to the stated differences, so no other amounts enter the calculation.
Why the Other Options Are Wrong
Option A: $275,240
Option A is wrong because $275,240 comes from subtracting the site adjustment instead of adding it: $288,000 − $7,000 − $5,760 = $275,240. The subject has more site area, so the comparable must be adjusted up by $7,000, giving the correct $289,240.
Option C: $295,000
Option C is wrong because $295,000 leaves out the GLA adjustment: $288,000 + $7,000 = $295,000. The comparable has 80 sf more living area than the subject, so $5,760 must also be subtracted, giving $289,240.
Option D: $300,760
Option D is wrong because $300,760 comes from adding the GLA adjustment instead of subtracting it: $288,000 + $7,000 + $5,760 = $300,760. The comparable is superior in living area, so that adjustment is negative, and the correct result is $289,240.
CIA: Comp Inferior, Add
Comp Inferior, Add; Comp Superior, Subtract. Ask whether the comparable has less or more of the feature than the subject before choosing the sign.
How to use: Use CIA on each line of the grid to set the sign before you do any multiplication.
Exam Tip
Write the sign next to each difference before calculating; opposing adjustments in one question are designed to catch sign errors.
Common Mistakes to Avoid
- -Adjusting the subject instead of the comparable, which reverses the signs
- -Treating all adjustments as additions
- -Forgetting one of the two adjustments when both are stated
Concept Deep Dive
Analysis
This question tests the direction of adjustments when two differences pull in opposite directions. Adjustments are made to the comparable to make it look like the subject. Because the subject has more site area, the comparable is adjusted up for site; because the subject has less living area, the comparable is adjusted down for GLA.
Background Knowledge
In the sales comparison approach, adjustments are made to the comparable, not the subject. If the comparable is inferior in a feature, its price is adjusted up; if it is superior, its price is adjusted down. Marginal rates, such as dollars per square foot of difference, should be supported by market evidence such as paired sales or statistical analysis.
Real-World Application
An appraiser compares a subject on a larger lot with a comparable that has a slightly bigger house. Paired sales support a site rate and a GLA rate, so the appraiser adds for the comparable's smaller lot and subtracts for its extra living area. The net effect is a small upward adjustment.
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:
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