A comparable sold for $312,000. Apply a supported +3% time adjustment to that price, then a −$8,000 extra-bathroom adjustment expressly measured in effective-date dollars. What adjusted price results?
Correct Answer
B) $313,360
312000 × 1.03 − 8000 = 313360. Common errors: adding the bathroom adjustment instead of subtracting it gives $329,360; leaving out the bathroom adjustment gives $321,360; time-adjusting the bathroom adjustment that is already in effective-date dollars gives $313,120.
Why This Is the Correct Answer
Option B is correct because $312,000 x 1.03 = $321,360, and subtracting the $8,000 bathroom adjustment gives $313,360. The time adjustment applies to the sale price, and the bathroom adjustment is already measured in effective-date dollars, so it is not time adjusted again. Percentage and dollar adjustments can be combined this way when each is supported.
Why the Other Options Are Wrong
Option A: $313,120
Option A is wrong because $313,120 comes from (312,000 - 8,000) x 1.03, which time-adjusts the bathroom adjustment even though it is already in effective-date dollars. The correct sequence is 312,000 x 1.03 - 8,000 = $313,360.
Option C: $321,360
Option C is wrong because $321,360 is just 312,000 x 1.03, which leaves out the -$8,000 bathroom adjustment. Subtracting it gives the correct $313,360.
Option D: $329,360
Option D is wrong because $329,360 comes from 312,000 x 1.03 + 8,000, adding the bathroom adjustment instead of subtracting it. The adjustment is negative, so the correct result is 321,360 - 8,000 = $313,360.
Time first, then today's dollars
Bring the old sale price forward to today, then apply adjustments that are already in today's dollars. Do not move today's dollars forward again.
How to use: Use this sequence on any grid problem that mixes a percentage time adjustment with dollar adjustments.
Exam Tip
Read whether each dollar adjustment is stated in effective-date dollars before deciding the order of operations. Check the sign of each adjustment before adding or subtracting.
Common Mistakes to Avoid
- -Time-adjusting a dollar adjustment that is already in effective-date dollars
- -Adding a negative adjustment instead of subtracting it
- -Stopping after the time adjustment and forgetting other adjustments
Concept Deep Dive
Analysis
This question tests the order and treatment of combined percentage and dollar adjustments. The +3% time adjustment applies to the $312,000 sale price, while the -$8,000 bathroom adjustment is already in effective-date dollars and is applied afterward without being time adjusted. Getting the sign and sequence right produces $313,360.
Background Knowledge
Adjustments are made to the comparable, and percentage and dollar adjustments may be combined in the sales comparison approach. A time (market conditions) adjustment brings the sale price to the effective date, and a dollar adjustment already measured in effective-date dollars should not be time adjusted a second time. Time adjustments must be supported by evidence.
Real-World Application
In a rising market, an appraiser applies a supported 3% time adjustment to a comparable sold several months ago. The comparable has an extra bathroom valued by current paired sales, so the appraiser subtracts that current-dollar amount after the time adjustment.
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