A comparable and subject are matched on all material transaction and property elements except a fireplace that the comparable has and the subject lacks. The supported contribution is $3,500. Relevant market conditions are unchanged. What adjustments are supported by these facts?
Correct Answer
B) Subtract $3,500 for the fireplace; no other nonzero adjustment is indicated
The comparable has the supported superior fireplace contribution, so subtract $3,500. With all other material elements stipulated matched and market conditions unchanged, there is no additional supported adjustment in this exercise. Matching bedroom and bath counts alone would not establish that conclusion in an actual appraisal.
Why This Is the Correct Answer
Option B is correct because the comparable has a fireplace the subject lacks, making it superior, so its price is reduced by the supported $3,500 contribution. With all other material elements matched and market conditions unchanged, no other nonzero adjustment is indicated.
Why the Other Options Are Wrong
Option A: Subtract $3,500 for the fireplace and add an unsupported nonzero time adjustment
Option A subtracts $3,500 for the fireplace but also adds an unsupported nonzero time adjustment. Market conditions are stated as unchanged, so a time adjustment has no support here.
Option C: Make no adjustment because some property counts match
Option C makes no adjustment because some property counts match. The properties still differ in the fireplace, which has a supported $3,500 contribution, so an adjustment is needed.
Option D: Add $3,500 for the comparable’s superior fireplace
Option D adds $3,500 for the comparable's superior fireplace. A superior feature on the comparable calls for a deduction, not an addition, so the adjustment should be -$3,500.
CBS: Comp Better, Subtract
A comparable with an extra feature the subject lacks is better, so subtract that feature's contribution. Only adjust where a real, supported difference exists.
How to use: Use this to choose both the sign and the scope of adjustments in a simple grid.
Exam Tip
Check the stem for stipulations such as unchanged market conditions; they rule out adjustments that some choices try to add.
Common Mistakes to Avoid
- -Adding the adjustment for a superior comparable feature
- -Inserting a time adjustment when market conditions are stable
- -Skipping a needed adjustment because some features match
Concept Deep Dive
Analysis
This question tests applying only the adjustments the facts support. Everything except the fireplace is stipulated as matched and market conditions are unchanged. The only supported adjustment is a deduction for the comparable's superior fireplace.
Background Knowledge
When a comparable is superior to the subject in a characteristic, the adjustment to the comparable's price is negative. Appraisers make adjustments only where there is a material difference and market support. Adding unsupported adjustments weakens credibility.
Real-World Application
An appraiser selects a comparable from the same subdivision, sold recently in a stable market, identical to the subject except for a fireplace. Using a market-supported $3,500 contribution, the appraiser deducts that amount and makes no other line-item adjustments.
More Sales Comparison Questions
Which stated cause of supported value loss is external?
Improvement cost new is $450,000. Separately supported improvement depreciation deductions of $45,000, $25,000, $15,000 are expressly nonoverlapping and not already excluded from cost new. Add supported site value of $125,000, already reflecting any site losses. What total indicated value results?
Which two depreciation categories may each be classified as curable or incurable by comparing the cost to remedy a deficiency with the value gained?
Improvement cost new is $800,000. Separately supported improvement depreciation deductions of $120,000, $80,000, $40,000 are expressly nonoverlapping and not already excluded from cost new. No site is included. What depreciated improvement amount results?
The principle of anticipation in real estate valuation states that:
Which highest-and-best-use criterion addresses whether a proposed use is allowed by zoning and applicable legal restrictions?
Three comparables produce adjusted indications of $312,000, $309,000 and $315,000, requiring gross adjustments of 9%, 14% and 22% respectively. Verification also establishes that the first sale is the closest competitive substitute and its adjustments are better supported than the other two. Which indication deserves the most weight on those facts?
When reconciling value indications from the three approaches to value, an appraiser should:
A property sold at a cash-equivalent price of $1,062,500. Its stabilized annual NOI is $85,000. What is the indicated overall rate?
In reconciliation, an appraiser should:
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Cost Approach
13.6% of exam
Income Approach
8.2% of exam
Related Tools
Previous Question
An appraiser is valuing a property where the cost approach indicates $520,000, the sales comparison approach indicates $485,000, and the income approach indicates $510,000. Given that this is an owner-occupied single-family residence in an active market with good comparable sales, which approach should receive the most weight?
Next Question
Market evidence indicates a constant price per dwelling unit among otherwise matched properties. A four-unit property sells for $412,000. What value does this indicate for a matched three-unit property?