A grid's final indications span $380,000 to $460,000 — a 21% spread. What is the appropriate response to the width of the range?
Correct Answer
C) Investigate the spread and explain the support and uncertainty
A wide spread warrants investigation of comparability, data quality, adjustment support and remaining uncertainty. The spread alone does not prove an error or establish a mandatory percentage limit; credible evidence need not converge to a single exact number.
Why This Is the Correct Answer
Option C is correct because a wide spread calls for investigating comparability, data quality and adjustment support, then explaining what supports the conclusion and what uncertainty remains. The validity of an adjustment rests mainly on the strength of its supporting data. A spread alone does not prove an error or trigger a mandatory limit.
Why the Other Options Are Wrong
Option A: Assume the analysis is invalid because of the percentage spread
Option A, assuming the analysis is invalid because of the percentage spread, is wrong because a spread does not by itself prove error. It is a reason to investigate, not to discard the analysis.
Option B: Revise the adjustments until all indications match
Option B, revising the adjustments until all indications match, is wrong because altering adjustments to make results agree lacks support. Credible evidence need not converge to one exact figure.
Option D: Apply the maximum percentage spread permitted under USPAP
Option D, applying the maximum percentage spread permitted under USPAP, is wrong because USPAP sets no such percentage limit. The response depends on investigating and explaining the evidence.
Wide range? Dig, don't dismiss
A wide spread is a prompt to investigate the comparables and adjustments, not a verdict on the analysis.
How to use: Use this when a question asks what to do about widely varying indications.
Exam Tip
Be wary of options that cite a fixed USPAP percentage limit; look for the answer that investigates and explains.
Common Mistakes to Avoid
- -Treating a wide spread as automatic proof of error
- -Tweaking adjustments until indications agree
- -Citing a USPAP percentage limit on the range
Concept Deep Dive
Analysis
This question tests how to respond to a wide spread in adjusted indications. A wide range is a signal to examine comparability, data quality and adjustment support, not proof of error. The appraiser investigates and explains the remaining uncertainty.
Background Knowledge
Adjusted sale prices in a grid seldom match exactly. A wide range may point to poor comparables, unsupported adjustments or real market variation. The appraiser reviews the data and adjustments and explains how the final opinion was reached.
Real-World Application
An appraiser's adjusted comparables range from $380,000 to $460,000. Reviewing them, the appraiser finds one comparable needed large, poorly supported adjustments and gives it less weight, explaining the remaining range in the report.
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
Previous Question
Market prices have increased at a simple, non-compounded rate of 3% per month. A comparable sold at a cash-equivalent price of $415,000 exactly 1 month before the effective date, and no other adjustments apply. What is the time-adjusted price, to the nearest dollar?
Next Question
An appraiser is valuing a home for the executor of an estate; no lender is involved. Comparable 3, a brick ranch, sold for $348,000. In this county, sellers customarily pay the transfer tax and the owner's title policy, but in this sale the buyer agreed to pay those costs, $6,800 in total, in return for a lower price. The buyer also paid $4,200 of closing costs that buyers customarily pay here. Paired sales and agent interviews show that when buyers take on the seller's customary costs, prices are about $6,000 lower than they would otherwise be. What is Comparable 3's price after adjustment for this term of sale?