A comparable sold for $312,000. It requires a +3% market conditions adjustment and a -$8,000 adjustment for an extra bathroom. Applying the adjustments in the conventional sequence, what is the adjusted sale price?
Correct Answer
A) $313,360
Why this is correct: market conditions are applied to the sale price before physical adjustments, because the physical adjustment is expressed in today’s dollars and should not itself be inflated. Calculation: $312,000 × 1.03 = $321,360; $321,360 - $8,000 = $313,360. Why the other choices are wrong: $313,120 deducts the bathroom first and then inflates it by 3%, which is the sequence error this question is about; $321,360 stops before the physical adjustment; $304,000 applies the physical adjustment and omits market conditions entirely.
Why This Is the Correct Answer
Why this is correct: market conditions are applied to the sale price before physical adjustments, because the physical adjustment is expressed in today’s dollars and should not itself be inflated. Calculation: $312,000 × 1.03 = $321,360; $321,360 - $8,000 = $313,360. Why the other choices are wrong: $313,120 deducts the bathroom first and then inflates it by 3%, which is the sequence error this question is about; $321,360 stops before the physical adjustment; $304,000 applies the physical adjustment and omits market conditions entirely.
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