A $400,000 comparable has only three signed adjustments: +$20,000, −$8,000 and −$12,000. What are its net and gross adjustment percentages?
Correct Answer
D) Net 0.0%; gross 10.0%
Net = (20000 − 8000 − 12000) / 400000 × 100 = 0%; gross = (20000 + 8000 + 12000) / 400000 × 100 = 10%. Common errors: swapping net and gross gives Net 10.0%; gross 0.0%; using only the positive adjustment as the net gives Net 5.0%; gross 10.0%; netting the adjustments for the gross figure too gives Net 0.0%; gross 0.0%.
Why This Is the Correct Answer
Option D is correct because net = (+$20,000 − $8,000 − $12,000) / $400,000 = 0%, and gross = ($20,000 + $8,000 + $12,000) / $400,000 = $40,000 / $400,000 = 10%. Net shows the overall direction after offsets. Gross shows the total amount of adjustment regardless of sign.
Why the Other Options Are Wrong
Option A: Net 10.0%; gross 0.0%
Option A, net 10.0% and gross 0.0%, swaps the two measures. The 10% figure belongs to the gross ($40,000 / $400,000), and the 0% figure belongs to the net, which is net 0.0% and gross 10.0%.
Option B: Net 5.0%; gross 10.0%
Option B, net 5.0% and gross 10.0%, uses only the positive adjustment for the net ($20,000 / $400,000 = 5%). The net must include the negatives: ($20,000 − $8,000 − $12,000) / $400,000 = 0%.
Option C: Net 0.0%; gross 0.0%
Option C, net 0.0% and gross 0.0%, nets the adjustments for the gross figure too. Gross ignores signs: ($20,000 + $8,000 + $12,000) / $400,000 = 10%.
Net nets, gross grosses
Net lets pluses and minuses cancel; gross adds every adjustment as a positive amount.
How to use: Use this to compute each percentage correctly from a list of signed adjustments.
Exam Tip
A net of zero does not mean a comparable needed no adjustments; check the gross percentage too.
Common Mistakes to Avoid
- -Swapping the net and gross percentages
- -Leaving negative adjustments out of the net
- -Letting signs cancel when computing gross
Concept Deep Dive
Analysis
This question tests the difference between net and gross adjustment percentages. Net uses the signed sum of adjustments, so offsetting adjustments cancel; gross uses the sum of absolute values. Here the net is 0% and the gross is 10%.
Background Knowledge
The sales comparison grid reports a net adjustment total, net adjustment percentage and gross adjustment percentage for each comparable. A comparable can have a small net adjustment while still needing large individual adjustments, which the gross percentage reveals. Both figures help judge how similar a comparable is to the subject.
Real-World Application
An appraiser's best-located comparable needs +$20,000 for size and −$8,000 and −$12,000 for other features. Its net adjustment is zero, but the gross is 10% of its $400,000 price. The appraiser notes in the report that offsetting adjustments, not close similarity, produced the zero net.
More Sales Comparison Questions
Supported adjustments are: non-market financing $10,000, GLA $36/sf, garage $3,500 per car, pool/spa $12,500. A comparable identical to the 2,800 sf subject sold for $267,000 with non-market financing. What is its adjusted price?
Using GLA $36/sf and non-market financing $10,000: a 3,100 sf comparable sold for $277,000 with non-market financing; the subject has 2,800 sf. Bath count differences are not adjusted. What is the adjusted price?
Using garage $3,500 per car and pool/spa $12,500: a comparable with a 2-car garage and a pool/spa sold for $268,000. The subject has a 3-car garage and no pool. What is the adjusted price?
Using GLA $36/sf, garage $3,500 per car and pool/spa $12,500: a 2,600 sf comparable with a 2-car garage and a pool/spa sold for $264,000. The subject is 2,800 sf with a 3-car garage and no pool. What is the adjusted price?
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