A comparable’s cash-equivalent price is $520,000. Its current-dollar adjustments are −$18,000, +$7,500, and −$4,000, with no others. What is the adjusted price?
Correct Answer
B) $505,500
520000-18000+7500-4000=505500. Common errors: adding the −$18,000 instead of subtracting it gives $541,500; adding the −$4,000 instead of subtracting it gives $513,500; subtracting the +$7,500 instead of adding it gives $490,500.
Why This Is the Correct Answer
Option B is correct because $520,000 − $18,000 + $7,500 − $4,000 = $505,500. The adjustments net to −$14,500, which reduces the comparable's cash-equivalent price to the adjusted price.
Why the Other Options Are Wrong
Option A: $490,500
Option A, $490,500, subtracts the +$7,500 instead of adding it: $520,000 − $18,000 − $7,500 − $4,000. Adding the positive adjustment gives $505,500.
Option C: $513,500
Option C, $513,500, adds the −$4,000 instead of subtracting it: $520,000 − $18,000 + $7,500 + $4,000. Subtracting it gives $505,500.
Option D: $541,500
Option D, $541,500, adds the −$18,000 instead of subtracting it: $520,000 + $18,000 + $7,500 − $4,000. Subtracting it gives $505,500.
Keep the sign with the number
Treat each adjustment as a signed number and simply add them all to the price.
How to use: Use this when totaling several adjustments on a sales grid.
Exam Tip
Compute the net adjustment first, then apply it to the price; each wrong choice here comes from flipping one sign.
Common Mistakes to Avoid
- -Flipping the sign of one adjustment
- -Adjusting the subject instead of the comparable
- -Confusing net adjustment with gross adjustment
Concept Deep Dive
Analysis
This question tests adding signed dollar adjustments to a comparable's price. Apply each adjustment with its stated sign: −$18,000, +$7,500 and −$4,000 to $520,000. The net adjustment is −$14,500.
Background Knowledge
Adjustments are made to the comparable to show what it would have sold for if it were like the subject. A positive adjustment means the comparable is inferior in that feature; a negative adjustment means it is superior. The adjusted price is the sale price plus the net of all signed adjustments.
Real-World Application
A comparable has a superior location (−$18,000), an inferior garage (+$7,500) and a superior view (−$4,000). The appraiser nets these to −$14,500 and reports an adjusted price of $505,500.
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?
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