A comparable sold twice in eighteen months, first at $380,000 and then at $455,000, with a documented renovation between. For the grid the appraiser should use:
Correct Answer
B) The most recent sale, adjusted for time and condition
Why this is correct: The sales comparison grid compares the subject to properties in their current condition. The second sale price reflects the property after renovation, which is its current state. To use it, the appraiser must adjust for any time difference between that sale date and the effective date of the appraisal. Why the other choices are wrong: The first sale does not reflect the current, improved condition. Averaging the two prices is not a supported valuation technique. Resold properties are usable and often provide excellent data. Exam tip: In the grid, always aim to reflect the comparable's condition at the time of its sale relative to the subject's condition on the effective date.
Why This Is the Correct Answer
The most recent sale is the transaction that priced the property in its renovated state, which is the state that can be meaningfully compared to the subject. Adjusting it for time brings it to the effective date, and adjusting for condition aligns it with the subject's actual condition. Together those two adjustments are exactly what the answer specifies. The earlier sale is not discarded; it becomes support for quantifying the condition adjustment rather than a line in the grid.
Why the Other Options Are Wrong
Option A: The first sale, being the cleaner of the two transactions
Cleaner is doing a lot of unearned work in this option. The first sale may well have been an arm's length transaction, but it priced a pre-renovation property, so it describes a condition the comparable no longer has. Using it would require adding back the renovation's contributory value plus eighteen months of market movement, which is more estimating, not less.
Option C: The average of the two recorded prices
Averaging the two prices produces a number that corresponds to no property that ever existed, a half-renovated house at a mid-point date. Averaging is not a recognized appraisal technique for reconciling anything, in the grid or in final reconciliation, where the appraiser weighs indications rather than averaging them. The option is tempting only because splitting the difference feels balanced.
Option D: Neither, since resold properties are unusable
Resold properties are among the most useful data an appraiser can find, precisely because a repeat transaction on the same real estate controls for location, lot, and layout. Rejecting them would eliminate the paired resale technique used to derive market conditions adjustments. The stem even describes the renovation as documented, which is what makes the pair analytically valuable rather than unusable.
Match the State, Then Fix the Date
Ask first which of the two sales describes the property in a state comparable to the subject. Use that one. Then fix the date with a market conditions adjustment and fine-tune any remaining condition difference.
How to use: In any repeat-sale item, look for an event between the two transactions such as a renovation, a fire, a rezoning, or a lease signing. Use the sale on the side of that event that matches the subject, and use the pair itself to quantify the event's effect.
Exam Tip
Averaging is almost always wrong on appraisal exams. Whether the question is about two sales, three approaches, or several indications, the correct verb is reconcile or weight, not average.
Common Mistakes to Avoid
- -Averaging two sale prices of the same property
- -Using the pre-event sale because it looks like the cleaner transaction
- -Assuming a renovation contributes its full cost to value
Concept Deep Dive
Analysis
A property that sold twice in a short window is a gift to an appraiser, because a resale of the identical property isolates variables that paired sales across different properties never can. But the two prices here are not measuring the same asset. A documented renovation sits between them, so the $75,000 spread reflects two things at once: whatever the market did over eighteen months, and whatever the renovation added. The grid needs a comparable whose condition can be compared to the subject's condition on the effective date, and the second sale is the one that reflects the renovated property. Using it still requires a market conditions adjustment from its sale date to the effective date, and a condition adjustment to the extent the renovated comparable differs from the subject. The pair also has analytical value beyond the grid, because separating the time component from the renovation component gives the appraiser a market-derived measure of what the renovation contributed.
Background Knowledge
You need the market conditions adjustment and how paired resales of the same property are used to derive it, plus the concept of contributory value for renovations, which is usually less than cost for many improvements. You should also know that final reconciliation involves weighing indications by reliability rather than averaging them.
Real-World Application
An appraiser finds a comparable that sold at $380,000, was renovated with permits pulled for $42,000 of work, and resold at $455,000 eighteen months later. She uses the second sale in the grid, backs out roughly six percent of market appreciation to isolate the renovation's contribution near $52,000, and uses that figure to support her condition adjustments on other sales.
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