EstatePass
sales-comparison-approachmedium

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) The combined effect of two differences, which must be untangled

Why this is correct: In paired sales analysis, a valid pair must differ in only one significant feature. If a second difference exists (dated baths), the observed price gap ($22,000) reflects the combined value of both differences. Using this pair to extract a value for just one feature would introduce error. The analyst must either find separate data to isolate the bath adjustment or discard the pair. Why the other choices are wrong: "The isolated value of the primary feature difference alone" is incorrect because the pair is not isolated; it is contaminated. "A measurement error to discard silently" is wrong; the pair isn't an error, but it cannot be used for the intended purpose without adjustment. "Proof that paired analysis never works" is an extreme and incorrect conclusion. Exam tip: Always scrutinize paired sales for hidden differences in location, condition, or other features before accepting the price gap as a valid adjustment.

Answer Options
A
The isolated value of the primary feature difference alone
B
The combined effect of two differences, which must be untangled
C
A measurement error to discard silently
D
Proof that paired analysis never works

Why This Is the Correct Answer

Why this is correct: In paired sales analysis, a valid pair must differ in only one significant feature. If a second difference exists (dated baths), the observed price gap ($22,000) reflects the combined value of both differences. Using this pair to extract a value for just one feature would introduce error. The analyst must either find separate data to isolate the bath adjustment or discard the pair. Why the other choices are wrong: "The isolated value of the primary feature difference alone" is incorrect because the pair is not isolated; it is contaminated. "A measurement error to discard silently" is wrong; the pair isn't an error, but it cannot be used for the intended purpose without adjustment. "Proof that paired analysis never works" is an extreme and incorrect conclusion. Exam tip: Always scrutinize paired sales for hidden differences in location, condition, or other features before accepting the price gap as a valid adjustment.

Was this explanation helpful?

More sales-comparison-approach Questions

Excess land differs from surplus land in that excess land:

A subject property has a 3-car attached garage. The appraiser locates two valid paired sales: Sale 1 (with 3-car garage) sold for $512,000; Sale 2 (with 2-car garage) sold for $497,600. Both properties are otherwise identical β€” same age, quality, GLA, lot size, and neighborhood β€” and sold 5 days apart in a balanced market. The appraiser also confirms via public records and listing photos that no other functional or physical differences exist. What is the indicated contributory value of the *third* garage stall?

The most appropriate unit of comparison is determined by:

An appraiser analyzes three paired sales to isolate the effect of a fireplace. In Pair 1, the property with a fireplace sold for $12,000 more; in Pair 2, $10,500 more; and in Pair 3, $13,500 more. All pairs are highly similar and recent. The appraiser selects $12,000 as the final adjustment. Which principle best supports this selection?

A paired sales analysis yields an adjustment of βˆ’$15,000 for a property located on a busy arterial street. Later, the appraiser discovers that all three paired properties with arterial exposure also had 20% smaller lots than their non-arterial counterparts β€” a difference not initially controlled for. What is the most appropriate action per USPAP?

An appraiser identifies two comparable sales that are identical in all respects except that Sale #1 has a finished basement (1,200 sq ft) and sold for $432,000, while Sale #2 has an unfinished basement of the same size and sold for $408,000. Both sales occurred within three weeks of each other in a stable market. The appraiser intends to apply a per-square-foot adjustment for basement finish to the subject property, which has a 1,000 sq ft finished basement. What is the appropriate paired-sales-derived adjustment amount per square foot for a finished basement?

Three sales support $520,000; the borrower's purchase contract is $505,000. May the appraisal conclude above the contract price?

An appraiser develops a $3,200 adjustment for a fireplace based on a single paired sale. The subject has a fireplace; Comparable A does not. The appraiser applies +$3,200 to Comparable A. Later, the appraiser identifies a second pair showing a $4,600 fireplace contribution. The appraiser replaces the original adjustment with $3,900 β€” the simple average β€” and applies it to Comparable A. What is the appropriate USPAP-compliant action regarding the adjustment amount?

A comparable sold for $300,000 with the seller carrying a loan 2 points below market, a benefit worth $8,000. What is its cash-equivalent price?

Three comparables adjust to $412,000 (gross adj. 5%), $405,000 (gross adj. 22%), and $410,000 (gross adj. 8%). What is the best-supported value conclusion?

People Also Study

Practice More Appraiser Questions

Access all practice questions with progress tracking and adaptive difficulty to pass your Appraiser exam.

Start Practicing