A comparable sold for $300,000 with signed adjustments +$12,000, −$5,000, +$3,000 and −$2,000. What is its gross adjustment percentage, rounded to one decimal place?
Correct Answer
D) 7.3%
(|12000| + |−5000| + |3000| + |−2000|) / 300000 × 100 = 7.3333%; rounded to one decimal = 7.3%. Common errors: computing the net instead of the gross percentage gives 2.7%; adding only the positive adjustments gives 5.0%; misplacing the decimal (×10 instead of ×100) gives 0.7%.
Why This Is the Correct Answer
Option D is correct because the absolute adjustments total $12,000 + $5,000 + $3,000 + $2,000 = $22,000. Dividing by the $300,000 sale price gives 0.07333, or about 7.3% when rounded to one decimal.
Why the Other Options Are Wrong
Option A: 0.7%
Option A, 0.7%, misplaces the decimal by multiplying by 10 instead of 100: $22,000 ÷ $300,000 × 10 is about 0.7. Multiplying by 100 gives the correct 7.3%.
Option B: 2.7%
Option B, 2.7%, is the net adjustment percentage: ($12,000 − $5,000 + $3,000 − $2,000) ÷ $300,000 = $8,000 ÷ $300,000, about 2.7%. Gross uses absolute values and is about 7.3%.
Option C: 5.0%
Option C, 5.0%, adds only the positive adjustments: ($12,000 + $3,000) ÷ $300,000 = 5.0%. Gross includes the negative adjustments as positive amounts too, giving 7.3%.
Drop signs, divide, times 100
For gross percentage, make each adjustment positive, add them, divide by sale price, then multiply by 100.
How to use: Use this as a step order for any gross adjustment percentage question.
Exam Tip
The gross percentage cannot be smaller than the net percentage's absolute value, which quickly rules out net-based choices.
Common Mistakes to Avoid
- -Using the net instead of the gross total
- -Leaving out the negative adjustments
- -Misplacing the decimal when converting to a percentage
Concept Deep Dive
Analysis
This question tests computing a gross adjustment percentage. Add the absolute values of all adjustments, divide by the sale price, and multiply by 100. Then round to one decimal place.
Background Knowledge
The Form 1004 sales grid reports both net and gross adjustment percentages for each comparable. Gross adjustment percentage measures the total amount of adjusting relative to price, regardless of direction. It helps the appraiser and reviewers judge how similar each comparable is to the subject.
Real-World Application
Completing the grid, an appraiser enters four adjustments totaling a net of +$8,000 on a $300,000 sale. The form also shows a gross adjustment of about 7.3%, which the appraiser considers when weighting the comparable.
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