All other price influences are controlled, and market analysis supports positive price contributions for each characteristic in which a comparable is superior to the subject. What direction applies to those comparable adjustments?
Correct Answer
A) Downward adjustments for those supported superior contributions
Supported superior comparable contributions are removed with negative adjustments when normalizing toward the subject. Superiority labels alone do not prove the unadjusted sale exceeds the subject’s value after all transaction and market influences; adjusted indications need not equal the true value exactly.
Why This Is the Correct Answer
Option A is correct because when a comparable is superior to the subject in a characteristic, the adjustment to the comparable's sale price is negative. Removing the supported contribution of the superior feature shows what the comparable would have sold for with the subject's characteristics.
Why the Other Options Are Wrong
Option B: Upward adjustments, because the comparable is better than the subject
Option B is wrong because it calls for upward adjustments because the comparable is better than the subject. Adding value to a superior comparable moves it further from the subject; a superior feature is adjusted downward.
Option C: Automatic equality with the subject, without adjustments
Option C is wrong because it treats the comparable as automatically equal to the subject without adjustments. The stem states the market supports positive contributions for the superior features, so those differences need adjustment.
Option D: Automatic rejection despite supported comparison
Option D is wrong because it rejects the comparable automatically despite supported comparison. Being superior in some features is a reason to adjust, not a reason to exclude a sale that otherwise compares well.
Better comp, bring it down
A comparable that is better than the subject gets adjusted down toward the subject.
How to use: Use this whenever a question asks for the sign of an adjustment to a superior comparable.
Exam Tip
Remember that adjustments go to the comparable, not the subject, and move its price toward the subject.
Common Mistakes to Avoid
- -Adjusting a superior comparable upward
- -Adjusting the subject's value instead of the comparable's price
- -Excluding a comparable because it is superior in some features
Concept Deep Dive
Analysis
This question tests the direction of adjustments for a comparable that is superior to the subject. Adjustments are made to the comparable's price toward the subject, so features that make the comparable better are removed with downward adjustments. The stem confirms the market supports a positive contribution for each superior feature.
Background Knowledge
Adjustments to a comparable's sale price are made toward, or relative to, the subject property. A superior comparable is adjusted down and an inferior comparable is adjusted up, so the adjusted prices estimate what each comparable would have sold for if it were like the subject.
Real-World Application
An appraiser's comparable has a renovated kitchen while the subject's kitchen is original. Market data supports a contribution for the update, so she subtracts it from the comparable's price in the grid.
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?
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