A comparable sold for $300,000 and has signed dollar adjustments of +$12,000, −$5,000, +$3,000 and −$2,000. What is the gross dollar adjustment?
Correct Answer
B) $22,000
Gross amount=12000+5000+3000+2000=22000. Gross uses absolute magnitudes; net signed amount is 8000. Neither is automatically an appraisal-acceptance threshold.
Why This Is the Correct Answer
Option B is correct because gross adjustment adds the absolute magnitudes of all adjustments: $12,000 + $5,000 + $3,000 + $2,000 = $22,000. Signs are ignored for gross, which shows the total amount of adjusting applied. Neither gross nor net is automatically an acceptance threshold for the comparable.
Why the Other Options Are Wrong
Option A: $8,000
Option A is wrong because $8,000 is the net adjustment: +$12,000 - $5,000 + $3,000 - $2,000 = $8,000. Gross ignores signs and totals $22,000.
Option C: $308,000
Option C is wrong because $308,000 is the adjusted sale price, $300,000 plus the net adjustment of $8,000. The question asks for the gross adjustment, which is $22,000.
Option D: $15,000
Option D is wrong because $15,000 counts only the positive adjustments, $12,000 + $3,000. Gross adjustment includes the negative ones as absolute values too, totaling $22,000.
Gross ignores the signs
Gross is the total effort, so drop every minus sign and add. Net keeps the signs and lets pluses and minuses offset.
How to use: Use this rule to choose between adding absolute values and adding signed values in grid calculations.
Exam Tip
Expect answer choices for net, gross and adjusted price; identify which one the question asks for before calculating.
Common Mistakes to Avoid
- -Reporting the net adjustment when gross is asked
- -Adding only the positive adjustments
- -Confusing the adjusted sale price with an adjustment total
Concept Deep Dive
Analysis
This question tests the difference between gross and net adjustments. Gross adjustment sums absolute values regardless of sign: $12,000 + $5,000 + $3,000 + $2,000 = $22,000. Net adjustment uses the signs and equals $8,000, a different measure.
Background Knowledge
The Form 1004 sales grid reports net adjustment, net adjustment percentage and gross adjustment percentage for each comparable. Net shows the overall direction and size of the price change; gross shows how much total adjusting was needed. Large gross adjustments can signal weaker comparability, but they are not by themselves a reason to reject a sale.
Real-World Application
A reviewer sees a comparable with an $8,000 net adjustment and thinks it is very similar to the subject. Calculating gross adjustment of $22,000 reveals that several offsetting differences were adjusted, prompting a closer look at their support.
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