A house sold for $300,000 and resold 10 months later for $315,000 with no change to the property. Using the paired-resale method, what simple monthly market-conditions rate is indicated?
Correct Answer
D) 0.5% per month
The percentage change is (315,000 − 300,000) ÷ 300,000 = 5%; dividing by the 10 months between sales gives 0.5% per month. Reporting the total change, or dividing by 12 instead of the actual months, gives the wrong rate.
Why This Is the Correct Answer
Option D is correct because the percentage change is (315,000 − 300,000) ÷ 300,000 = 5%. Dividing that 5% by the 10 months between sales gives 0.5% per month. This monthly rate can then be applied to comparables to account for changing market conditions.
Why the Other Options Are Wrong
Option A: 5.0% per month
Option A, 5.0% per month, is wrong because 5% is the total change over the whole 10-month period, not the monthly rate. The total must be divided by 10 months: 5% ÷ 10 = 0.5% per month.
Option B: 1.5% per month
Option B, 1.5% per month, is wrong because it treats a dollar figure as a percentage: $15,000 ÷ 10 months = $1,500 per month, misread as 1.5%. The rate must be based on the first sale price: 15,000 ÷ 300,000 = 5%, then 5% ÷ 10 = 0.5% per month.
Option C: 0.42% per month
Option C, 0.42% per month, is wrong because it divides the 5% change by 12 months (5% ÷ 12 ≈ 0.42%) instead of the actual 10 months between sales. The correct calculation is 5% ÷ 10 = 0.5% per month.
Change, then divide by months
First find the percent change on the first price, then divide by the actual months between the two sales.
How to use: Use this order on any paired-resale time adjustment question.
Exam Tip
Check the exact number of months in the stem; distractors often divide by 12 or skip the division entirely.
Common Mistakes to Avoid
- -Reporting the total percentage change as a monthly rate
- -Dividing by 12 months instead of the actual months between sales
- -Dividing the dollar change by an arbitrary number instead of the first sale price
Concept Deep Dive
Analysis
This question tests the paired-resale (sale-resale) method for deriving a market-conditions adjustment. The method calls for finding the percentage change between the two sale prices and dividing it by the number of months between the sales. Here the change is $15,000 on $300,000 over 10 months.
Background Knowledge
A sale and later resale of the same unchanged property isolates the effect of changing market conditions over time. The appraiser lists the sales, calculates the percentage change, divides by the months between sale dates, and applies the monthly estimate to comparables. A simple monthly rate does not compound.
Real-World Application
An appraiser finds a house in the subject's subdivision that sold twice in under a year with no renovations between sales. By computing the percentage change and dividing by the months between closings, the appraiser derives a monthly market-conditions rate. That rate, along with other evidence, supports time adjustments to the comparables.
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?
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