A 'pair' shows a $22,000 gap, but closer reading reveals the cheaper sale also had dated baths. The $22,000 represents:
Correct Answer
B) An unisolated gap that also reflects the bath difference and other factors
The raw gap is not isolated to the primary feature because bath condition also differs. Verify the transactions and control material confounding influences before deriving a feature contribution. The gap can include additional unexplained influences; it is not automatically a precise sum of exactly two known values.
Why This Is the Correct Answer
Option B is correct because the $22,000 gap is not isolated to the primary feature; it also reflects the difference in bath condition and possibly other unexplained influences. The appraiser must control for those differences before attributing a contribution to the feature. The gap is not necessarily an exact sum of two known values.
Why the Other Options Are Wrong
Option A: The exact isolated value of the primary feature, with no other influence
Option A is wrong because it calls the $22,000 the exact isolated value of the primary feature with no other influence. The dated baths are a second difference, so the gap cannot be attributed to the primary feature alone.
Option C: Proof that paired analysis is invalid for this feature in the market
Option C is wrong because it treats the flawed pair as proof that paired analysis is invalid for this feature in the market. One imperfect pair shows only that this pair needs further analysis or better data, not that the technique cannot work.
Option D: A reason to discard the evidence silently and say nothing about it in the report
Option D is wrong because it calls for discarding the evidence silently and saying nothing in the report. The appraiser must collect, verify and analyze the information needed for credible results, and hiding analyzed data does not meet that duty.
Two differences, no clean pair
A pair measures one feature only when everything else matches. If a second difference sneaks in, the gap is mixed.
How to use: Use this when a paired sales question reveals another difference between the sales.
Exam Tip
When a pair has more than one difference, choose the answer that treats the gap as mixed and calls for further analysis.
Common Mistakes to Avoid
- -Treating a mixed price gap as the value of one feature
- -Abandoning paired analysis after finding one flawed pair
- -Ignoring known differences between paired sales
Concept Deep Dive
Analysis
This question tests whether a price gap between two sales is truly isolated to the feature being measured. Because the cheaper sale also had dated baths, the $22,000 gap reflects more than one difference. The appraiser should verify the sales and control for the confounding factor before drawing a feature value from the pair.
Background Knowledge
Paired sales analysis depends on isolating one difference between sales. When sales differ in more than one way, the other differences must be adjusted for first, and the result is less reliable. Adjustments must reflect the market's reaction to the differences between properties.
Real-World Application
An appraiser compares two homes to measure a finished basement, then learns from the listing photos that the cheaper home also had original 1980s bathrooms. She adjusts for the bath condition using other data before using the pair, and notes the issue in her workfile.
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