A comparable sold for a cash-equivalent price of $500,000. Signed dollar adjustments applied to the comparable are +$25,000 (GLA), −$10,000 (condition), and −$5,000 (garage). What are the net dollar adjustment and the gross dollar adjustment?
Correct Answer
B) Net +$10,000; gross $40,000
Net=25000−10000−5000=+$10,000. Gross=25000+10000+5000=$40,000. The former retains direction; the latter sums magnitudes. Neither is the comparable’s adjusted price or an automatic test of acceptable comparability. The two cannot be interchanged or inferred merely from one another without underlying adjustments.
Why This Is the Correct Answer
Option B is correct because the net adjustment is +$25,000 − $10,000 − $5,000 = +$10,000, keeping direction. The gross adjustment is $25,000 + $10,000 + $5,000 = $40,000, summing magnitudes without regard to sign.
Why the Other Options Are Wrong
Option A: Net +$40,000; gross +$10,000
Option A, net +$40,000 and gross +$10,000, swaps the two measures. $40,000 is the sum of the magnitudes, which is the gross figure, while +$10,000 is the signed sum, which is the net figure.
Option C: Net +$10,000; gross $10,000
Option C correctly gives net +$10,000 but reports gross as $10,000, which is just the net figure repeated. Gross must add the magnitudes: $25,000 + $10,000 + $5,000 = $40,000.
Option D: Net −$10,000; gross $40,000
Option D gets gross $40,000 right but shows net as −$10,000, reversing the sign. The upward $25,000 exceeds the combined $15,000 of downward adjustments, so the net is +$10,000.
Net keeps signs, gross drops them
Net is like a bank balance where deposits and withdrawals offset; gross is like counting each transaction amount regardless of direction.
How to use: Use this when a question gives mixed plus and minus adjustments and asks for net and gross totals.
Exam Tip
Gross is at least as large as the absolute value of net, so an answer where gross is smaller than net is a sign the two have been swapped.
Common Mistakes to Avoid
- -Swapping the net and gross figures
- -Reporting the net amount as the gross amount
- -Reversing the sign of the net adjustment
Concept Deep Dive
Analysis
This question tests the difference between net and gross dollar adjustments on a single comparable. Net adjustment adds the adjustments with their signs, so upward and downward amounts offset each other. Gross adjustment adds the size of each adjustment regardless of sign, showing the total amount of adjusting that was done.
Background Knowledge
In the sales comparison grid, each comparable's adjustments are summarized as a net figure (signed total) and a gross figure (total of absolute values). Gross adjustment is often used as one guide to comparability, with more reliance commonly placed on sales that needed smaller gross adjustments. Neither figure is the adjusted sale price itself.
Real-World Application
An appraiser adjusts a comparable up $25,000 for a larger living area, down $10,000 for superior condition and down $5,000 for a better garage. The grid shows a net adjustment of +$10,000 and a gross adjustment of $40,000, and the appraiser considers the large gross figure when deciding how much weight to give this sale.
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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