Controlled equivalent sales, differing only in bedroom count, sold for $355,000 with four bedrooms and $340,000 with three. The subject has three bedrooms. What is the four-bedroom comparable’s adjusted price for this difference only?
Correct Answer
B) $340,000
Contribution = 355000 − 340000 = 15000; adjust the four-bedroom comparable down: 355000 − 15000 = 340000. Common errors: adding the bedroom adjustment instead of subtracting it gives $370,000; not adjusting the comparable gives $355,000; reporting only the adjustment gives $15,000.
Why This Is the Correct Answer
Option B is correct because the contribution is $355,000 − $340,000 = $15,000, and the superior four-bedroom comparable is adjusted downward: $355,000 − $15,000 = $340,000. Adjustments are made to the comparable to make it resemble the subject. A comparable with a feature the subject lacks receives a negative adjustment.
Why the Other Options Are Wrong
Option A: $15,000
Option A, $15,000, is only the bedroom adjustment amount ($355,000 − $340,000). The question asks for the comparable's adjusted price, which is $355,000 − $15,000 = $340,000.
Option C: $355,000
Option C, $355,000, is the comparable's unadjusted price. It ignores the $15,000 bedroom difference; after the downward adjustment the price is $340,000.
Option D: $370,000
Option D, $370,000, adds the bedroom adjustment instead of subtracting it: $355,000 + $15,000 = $370,000. The comparable has a bedroom the subject lacks, so it is adjusted down to $340,000.
CBS: Comp Better, Subtract
If the comparable is better than the subject, subtract; if the comparable is inferior, add.
How to use: Use this whenever you must decide the sign of an adjustment to a comparable.
Exam Tip
Read whether the question asks for the adjustment or the adjusted price. Both figures often appear among the options.
Common Mistakes to Avoid
- -Adding the adjustment to a superior comparable
- -Reporting the adjustment amount instead of the adjusted price
- -Adjusting the subject rather than the comparable
Concept Deep Dive
Analysis
This question tests two steps: extracting a feature contribution from a paired sale and applying it in the right direction. The pair shows the fourth bedroom contributes $15,000. Because the subject has only three bedrooms, the four-bedroom comparable is superior and must be adjusted down.
Background Knowledge
Paired sales can measure the contribution of a single feature when other characteristics are controlled. Adjustments are applied to the comparable, not the subject. A comparable superior to the subject is adjusted down, and an inferior one is adjusted up.
Real-World Application
An appraiser values a three-bedroom house and uses a four-bedroom comparable. Paired sales in the subdivision show a fourth bedroom adds about $15,000, so the appraiser deducts that amount from the comparable's price.
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Which two depreciation categories may each be classified as curable or incurable by comparing the cost to remedy a deficiency with the value gained?
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The subject's market has shown a simple, non-compounded increase of 6% per year. A comparable sold at a cash-equivalent price of $320,000 exactly 12 months before the effective date, and no other adjustments apply. What is the time-adjusted price, to the nearest dollar?