A comparable sold for $300,000 and carries adjustments of +$12,000, -$5,000, +$3,000 and -$2,000. What is the gross adjustment?
Correct Answer
B) $22,000
Why this is correct: the gross adjustment sums the adjustments without regard to sign, because it measures how far the comparable had to be moved rather than where it ended up. Calculation: $12,000 + $5,000 + $3,000 + $2,000 = $22,000. Why the other choices are wrong: $8,000 is the net adjustment, in which offsetting changes hide how much work the comparable needed; $15,000 and $7,000 sum only the upward and only the downward adjustments.
Why This Is the Correct Answer
Why this is correct: the gross adjustment sums the adjustments without regard to sign, because it measures how far the comparable had to be moved rather than where it ended up. Calculation: $12,000 + $5,000 + $3,000 + $2,000 = $22,000. Why the other choices are wrong: $8,000 is the net adjustment, in which offsetting changes hide how much work the comparable needed; $15,000 and $7,000 sum only the upward and only the downward adjustments.
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Using the band of investment technique, if the mortgage component is 75% at 6% and the equity component is 25% at 12%, the overall capitalization rate is:
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A comparable sale requires the following adjustments: +$5,000 for location, -$3,000 for condition, +$2,000 for size. If the sale price was $285,000, what is the adjusted value?