A house sold for $280,000 in March and resold in December (nine months later) for $296,800 with no physical change. Using the paired-resale method, what simple monthly rate applies to comparables?
Correct Answer
A) 0.67% per month
The percentage change is ($296,800 − $280,000) ÷ $280,000 = 6.0%; dividing by nine months gives about 0.67% per month. Dividing by 12 gives 0.5%.
Why This Is the Correct Answer
Option A is correct because the change is ($296,800 − $280,000) ÷ $280,000 = $16,800 ÷ $280,000 = 6.0%. Dividing 6.0% by the nine months between sales gives about 0.67% per month, which is then applied to comparables.
Why the Other Options Are Wrong
Option B: 6.0% per month
Option B, 6.0% per month, is the total change over the nine months, not a monthly rate. It must be divided by 9: 6.0% ÷ 9 ≈ 0.67% per month.
Option C: 0.5% per month
Option C, 0.5% per month, divides the 6.0% change by 12 instead of 9 months (6.0% ÷ 12 = 0.5%). The sales were nine months apart, so the rate is 6.0% ÷ 9 ≈ 0.67%.
Option D: 1.87% per month
Option D, 1.87% per month, comes from dividing the $16,800 dollar change by the 9 months ($16,800 ÷ 9 ≈ $1,867 per month) and reading that dollar figure as a percentage. The change must first be turned into a percentage of the first price ($16,800 ÷ $280,000 = 6.0%), and 6.0% ÷ 9 gives about 0.67% per month.
Percent first, then months
Turn the price change into a percent of the first sale, then divide by the actual months between sales.
How to use: Use this for any sale-resale time adjustment calculation.
Exam Tip
Count the months between the two sales carefully; dividing by 12 out of habit is a common trap.
Common Mistakes to Avoid
- -Reporting the total change as a monthly rate
- -Dividing by 12 months instead of the actual interval
- -Dividing the dollar change instead of the percentage change
Concept Deep Dive
Analysis
This question tests the paired-resale method for a monthly market conditions rate. The steps are to calculate the percentage change between sale and resale, then divide by the number of months between the sales. Then apply the monthly rate to comparables.
Background Knowledge
A paired resale of the same unchanged property is a direct way to measure market change over time. The total percentage change divided by the months between sales gives a simple monthly rate that can be applied to comparables.
Real-World Application
An appraiser finds a house that sold in March and resold unchanged in December for 6% more. The appraiser derives about 0.67% per month and, with other supporting data, applies it to comparables that sold earlier in the year.
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?
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An appraiser finds one pair supporting a $12,000 adjustment and another supporting $19,000 for the same feature. The next step is:
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