Sales Comparisonhard16.4% of exam

A comparable sold for $360,000 and requires +6% for market conditions and −3% for location, applied in that order. Its adjusted price is:

Correct Answer

A) $370,152

Why this is correct: Adjustments must be applied sequentially (multiplicatively), not by adding percentages. First, apply the time adjustment: $360,000 × 1.06 = $381,600. Then, apply the location adjustment to that result: $381,600 × 0.97 = $370,152. Why the other choices are wrong: '$370,800 using additive percentages' is wrong because it incorrectly adds +6% and -3% for a net +3% ($360,000 × 1.03). '$381,600 with only the time adjustment' is wrong because it omits the required location adjustment. '$349,200 applying the location cut first' is wrong because it applies adjustments in the wrong order and subtracts 3% from the original price. Exam tip: Always apply adjustments in the order given, multiplying each result.

Answer Options

$370,152

$370,800 using additive percentages

$381,600 with only the time adjustment

$349,200 applying the location cut first

Why This Is the Correct Answer

Applying the adjustments in the order given and multiplying each result yields $370,152. The sequence also matches standard appraisal practice, in which transactional adjustments including market conditions are applied first, and property adjustments such as location are applied to the resulting adjusted price. The small difference between $370,152 and the additive $370,800 is the compounding effect, and it grows quickly as percentages get larger. Precision here is not pedantry, since sequence errors accumulate across a full grid of four or five comparables.

Why the Other Options Are Wrong

Option B: $370,800 using additive percentages

This adds plus six and minus three to a net three percent and applies it once, which ignores that the location discount should operate on the time-adjusted price rather than the original. Additive treatment is a reasonable approximation only when the percentages are very small, and it is never the technically correct method. The $648 gap is the entire point of including this distractor.

Option C: $381,600 with only the time adjustment

Stopping at $381,600 applies the market conditions adjustment and abandons the location adjustment altogether. It is a reading error rather than a math error, produced by computing the first step and matching it to an answer choice. Always confirm you have used every adjustment the stem supplied before selecting.

Option D: $349,200 applying the location cut first

This applies the three percent location cut to the unadjusted $360,000 and either skips or misplaces the time adjustment, landing at $349,200. Beyond the sequence problem, the result moves the comparable downward overall when the larger adjustment was upward, which fails a quick sanity check. Reversing the given order also contradicts the stem's explicit instruction.

Multiply Down the Chain

Treat percentage adjustments like links in a chain rather than items on a list. Each link grabs the number the previous link produced. Write the running total after every step so you never accidentally reach back to the original price.

How to use: Convert every percentage to a multiplier first, then multiply straight through in the stated order. If an answer choice equals the price times one plus the sum of the percentages, it is the additive trap.

Exam Tip

When two answers sit within a fraction of a percent of each other, the exam is testing compounding versus addition. Choose the compounded figure.

Common Mistakes to Avoid

-Summing percentages and applying them in one step
-Applying a later percentage to the original rather than the running price
-Stopping after the first adjustment because the intermediate figure appears among the options

Concept Deep Dive

Analysis

Percentage adjustments compound rather than add, because each one operates on the price as it stands after the prior adjustment rather than on the original price. That is not a bookkeeping preference; it reflects what the percentages mean. A six percent market conditions adjustment says the whole property, as it exists, would have sold for six percent more on the effective date, and a three percent location discount then says that already-updated price should be reduced by three percent for the inferior site. Working the two in sequence gives $360,000 times 1.06, which is $381,600, then $381,600 times 0.97, which is $370,152. Adding the percentages first to reach a net three percent produces $370,800, close enough to look plausible and wrong by $648, which is exactly the size of trap the exam likes.

Background Knowledge

You need the standard sequence of adjustments, with property rights, financing, conditions of sale, expenditures after purchase, and market conditions applied first and in that order, followed by property adjustments for location and physical characteristics. You also need comfort converting percentages to multipliers, where plus six percent is 1.06 and minus three percent is 0.97.

Real-World Application

An appraiser in a market that appreciated six percent since a comparable closed applies the time adjustment to bring the sale to the effective date, then applies a location discount as a percentage to the time-adjusted price, and shows each running subtotal in the grid so a reviewer can follow the order.

sequence of adjustmentsmarket conditions adjustmentcompounding percentagesadjusted sale price

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