A $320,000 comparable has separately supported nonoverlapping percentage adjustments +5%,−3% and +2%, each expressly defined on the SAME original price. Apply their net percentage once. What adjusted price results?
Correct Answer
B) $332,800
320000×(1+0.05−0.03+0.02)=332800. Common errors: treating the −3% as an increase gives $352,000; leaving out the +2% adjustment gives $326,400; applying only the +5% adjustment gives $336,000.
Why This Is the Correct Answer
Option B is correct because the net percentage is +5% − 3% + 2% = +4%, and $320,000 × 1.04 = $332,800. Each adjustment is defined on the same original price, so summing them and applying the net once is consistent. All three adjustments are included with their proper signs.
Why the Other Options Are Wrong
Option A: $326,400
Option A, $326,400, comes from leaving out the +2% adjustment: $320,000 × (1 + 0.05 − 0.03) = $326,400. Including all three gives $320,000 × 1.04 = $332,800.
Option C: $336,000
Option C, $336,000, comes from applying only the +5% adjustment: $320,000 × 1.05 = $336,000. The −3% and +2% also apply, for a net +4% and $332,800.
Option D: $352,000
Option D, $352,000, comes from treating the −3% as an increase: $320,000 × (1 + 0.05 + 0.03 + 0.02) = $352,000. With the correct sign the net is +4%, giving $332,800.
Sum signs, apply once
Add the signed percentages first, then multiply the price by one plus the net.
How to use: Use this when several percentage adjustments share the same price base.
Exam Tip
Write each percentage with its sign before adding, and check that each listed adjustment is included.
Common Mistakes to Avoid
- -Treating a negative adjustment as positive
- -Leaving out one of the listed adjustments
- -Applying only the first adjustment
Concept Deep Dive
Analysis
This question tests additive percentage adjustments applied to one stated price base. Add the signed percentages to get the net change, then apply it once to the original price. Watch the signs: +5%, −3% and +2% net to +4%.
Background Knowledge
Additive percentage adjustments are summed and then applied to the price base on which they were defined. Adjustments are made to the comparable, not the subject. Percentage and dollar adjustments can be combined, but each must be applied on the correct base.
Real-World Application
A comparable sold for $320,000 and needs supported adjustments of +5% for location, −3% for condition and +2% for market conditions, all defined on the sale price. The appraiser nets them to +4% for an adjusted price of $332,800.
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