A comparable’s cash price is $400,000. Market data indicate a total time increase of 5%, and a −$15,000 garage adjustment is stated in effective-date dollars. What is the adjusted price?
Correct Answer
B) $405,000
400000×1.05−15000=405000. Common errors: adding the garage adjustment instead of subtracting it gives $435,000; leaving out the garage adjustment gives $420,000; time-adjusting the garage adjustment that is already in effective-date dollars gives $404,250.
Why This Is the Correct Answer
Option B is correct because $400,000 × 1.05 = $420,000 after the time adjustment, and applying the −$15,000 garage adjustment gives $420,000 − $15,000 = $405,000. The garage amount is already in effective-date dollars, so it is applied after the time adjustment and is not inflated. The order follows the stated bases rather than a universal rule.
Why the Other Options Are Wrong
Option A: $404,250
Option A, $404,250, is wrong because it subtracts the garage adjustment first and then time-adjusts: (400,000 − 15,000) × 1.05 = 404,250. That improperly applies the time increase to a garage amount already stated in effective-date dollars; the correct result is 400,000 × 1.05 − 15,000 = $405,000.
Option C: $420,000
Option C, $420,000, is wrong because it applies only the time adjustment (400,000 × 1.05 = 420,000) and leaves out the −$15,000 garage adjustment. Subtracting the garage adjustment gives $405,000.
Option D: $435,000
Option D, $435,000, is wrong because it adds the garage adjustment instead of subtracting it: 400,000 × 1.05 + 15,000 = 435,000. The adjustment is negative, so the correct result is 420,000 − 15,000 = $405,000.
Match each adjustment to its base
Apply each adjustment to the price it was measured against; effective-date dollars are not time-adjusted again.
How to use: Use this when a grid mixes percentage and dollar adjustments.
Exam Tip
Look for wording such as effective-date dollars, which tells you whether a dollar adjustment should be inside or outside the time adjustment.
Common Mistakes to Avoid
- -Time-adjusting a dollar amount that is already in current dollars
- -Adding a negative adjustment instead of subtracting it
- -Applying only the percentage adjustment and forgetting the dollar adjustment
Concept Deep Dive
Analysis
This question tests applying a percentage adjustment and a dollar adjustment in the correct order based on their stated bases. The garage adjustment is already expressed in effective-date dollars, so it should not be time-adjusted. Apply the 5% time increase to the cash price, then subtract the garage amount.
Background Knowledge
Time adjustments must be supported by evidence and are applied to prices from an earlier date. A dollar adjustment already measured as of the effective date does not need a further time adjustment. When percentage and dollar adjustments are combined, the order depends on the base each adjustment is stated in.
Real-World Application
An appraiser derives a garage adjustment from current paired sales and a time adjustment from resale data. Because the garage figure reflects current prices, the appraiser time-adjusts the comparable's price first and then applies the garage amount. The report states the base for each adjustment.
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?
In a neighborhood with declining values and marketing times over six months, what must Fannie Mae lenders confirm about the sales comparison analysis?
A house is a 4,000 square foot home in an area of 2,000 square foot homes. How must the appraiser treat this over-improvement in the sales comparison grid?
According to the Interagency Appraisal and Evaluation Guidelines, which items should an appraisal’s market conditions discussion include?
A comparable listed at $420,000 and sold for $399,000. What sale-to-list price ratio (sale price ÷ list price) does this indicate?
An appraiser wants to describe the neighborhood boundaries in a Fannie Mae report. Which approach is acceptable?
Which of these is listed by Fannie Mae as a sales or financing concession?
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A comparable sale price is adjusted upward by 5%, and the resulting adjusted price is then adjusted upward by 4%. What is the total percentage increase from the original sale price?
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