A verified home sale is $340,000 and the consistently measured comparison area is 2,000 square feet. What is the sale price per square foot, rounded to the nearest dollar?
Correct Answer
D) $170 per sq ft
340000/2000=170 dollars per square foot. This comparison unit is not automatically the marginal adjustment rate for an area difference.
Why This Is the Correct Answer
Option D is correct because $340,000 divided by 2,000 square feet equals $170 per square foot. Stating each sale price in like units of comparison lets the appraiser compare sales of different sizes on a common basis.
Why the Other Options Are Wrong
Option A: $17 per sq ft
Option A, $17 per sq ft, results from adding a zero to the area: $340,000 / 20,000 = $17. The measured area is 2,000 square feet, so the correct figure is $340,000 / 2,000 = $170.
Option B: $1,700 per sq ft
Option B, $1,700 per sq ft, results from dropping a zero from the area: $340,000 / 200 = $1,700. Dividing by the actual 2,000 square feet gives $170 per square foot.
Option C: $6 per sq ft
Option C, $6 per sq ft, divides the area by the price entered in thousands (2,000 / 340 = 5.88, rounded to $6), inverting the ratio. Price per square foot puts the price on top: $340,000 / 2,000 = $170.
Price Over Area
Price per square foot is the price on top and the area underneath: dollars divided by square feet.
How to use: Use this to set up any unit-of-comparison calculation quickly and avoid reversing the division.
Exam Tip
Estimate before you choose: a $340,000 home of 2,000 square feet should land in the low hundreds of dollars per square foot, so an answer ten times too high or too low, or one from dividing area by price, signals a slip.
Common Mistakes to Avoid
- -Misplacing a zero in the area or price
- -Dividing the area by the price instead of the price by the area
- -Treating the average price per square foot as the marginal GLA adjustment rate
Concept Deep Dive
Analysis
This question tests computing a basic unit of comparison: sale price per square foot. Divide the verified price by the consistently measured area. The distractors come from misplacing a zero in the area or inverting the ratio, so a quick size check catches them; the result is a comparison unit, not necessarily the marginal rate for adjusting area differences.
Background Knowledge
Units of comparison express each sale price per relevant unit, such as square foot of living area, so sales of different sizes can be compared. The average unit price of a property is not necessarily the same as the marginal rate the market pays for an added or missing square foot.
Real-World Application
An appraiser compiles recent sales in a subdivision and converts each to price per square foot of GLA. A $340,000 sale of a 2,000 sf home shows $170 per square foot, which the appraiser compares with other sales to understand the market range.
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?
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