A cash-equivalent comparable sold for $360,000. Signed dollar adjustments are +$18,000, −$9,000 and −$3,600. What signed net adjustment percentage of the sale price results, to one decimal place?
Correct Answer
D) 1.5%
Signed net=5400. Percentage=5400/360000 ×100=1.5%. Gross absolute adjustment would be 30600, a different measure.
Why This Is the Correct Answer
Option D is correct because the signed net adjustment is $18,000 - $9,000 - $3,600 = $5,400. Dividing by the $360,000 sale price gives $5,400 / $360,000 x 100 = 1.5%. The result is positive because the upward adjustment outweighs the two downward ones.
Why the Other Options Are Wrong
Option A: 8.5%
Option A is wrong because 8.5% is the gross adjustment percentage: ($18,000 + $9,000 + $3,600) / $360,000 = $30,600 / $360,000 = 8.5%. Net uses signs, giving $5,400 / $360,000 = 1.5%.
Option B: 3.5%
Option B is wrong because 3.5% treats the -$3,600 adjustment as positive: ($18,000 - $9,000 + $3,600) / $360,000 = $12,600 / $360,000 = 3.5%. Keeping every sign gives a net of $5,400, or 1.5%.
Option C: 5.0%
Option C is wrong because 5.0% uses only the positive adjustment: $18,000 / $360,000 = 5.0%. Including the -$9,000 and -$3,600 gives a net of $5,400, or 1.5%.
Net keeps the sign
Net adds the adjustments with their signs and keeps the result's sign. Gross drops all signs.
How to use: Use this before dividing by the sale price in any net or gross percentage question.
Exam Tip
Compute the signed total first, then divide by the sale price; check whether the result should be positive or negative.
Common Mistakes to Avoid
- -Reporting the gross percentage when net is asked
- -Getting the sign of one adjustment wrong
- -Leaving out the negative adjustments
Concept Deep Dive
Analysis
This question tests calculating a net adjustment percentage. The net adjustment is +$18,000 - $9,000 - $3,600 = +$5,400, and $5,400 / $360,000 = 1.5%. Distractors come from using gross figures, only the positive adjustment or the wrong sign on one adjustment.
Background Knowledge
The Form 1004 grid reports net and gross adjustment percentages based on the comparable's sale price. Net shows the overall direction and size of the change; gross shows the total amount of adjusting. Together these figures help readers judge how much a comparable had to be adjusted.
Real-World Application
An appraiser's grid shows one large upward adjustment and two smaller downward ones on a $360,000 sale. The software reports a 1.5% net and 8.5% gross adjustment, and she explains why the offsetting adjustments are supported.
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?
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Previous Question
A single-family home with a permitted garage apartment is being appraised, and a comparable sale has no apartment. Leases in the neighborhood show homes with a garage apartment rent for $2,950 per month and similar homes without one for $2,350. Leased separately, a garage apartment rents for about $850 per month. The owner pays about $100 per month for the apartment's utilities. The apartment cost $84,000 to build six years ago. Rented single-family homes in the neighborhood sell for about 150 times their monthly rent. What adjustment amount is indicated for the garage apartment?
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A comparable sold for all cash in a market where financed sales dominate. The appraiser should: