What makes a marginal site-area adjustment defensible?
Correct Answer
D) Relevant market evidence supports applying the rate to the specific incremental area and competitive site range.
Incremental area adjustments can be supported when market evidence supports the marginal rate for the specific incremental area and competitive site range; that rate need not be uniform for every lot size. Calling an adjustment paired, converting percentages to dollars, or rounding to $100 does not by itself establish the rate or its applicability.
Why This Is the Correct Answer
Option D is correct because a marginal site-area adjustment is defensible when relevant market evidence supports the rate for the specific incremental area and competitive site range. That rate need not be uniform across all lot sizes, so the support must fit the size range actually involved.
Why the Other Options Are Wrong
Option A: Labeling the adjustment as paired data establishes its support.
Option A says labeling the adjustment as paired data establishes its support. A label does not create support; the underlying sales must actually show the market's reaction to the area difference.
Option B: Converting each percentage adjustment to dollars after computing a total makes the site adjustment correct.
Option B says converting each percentage adjustment to dollars after computing a total makes the site adjustment correct. A conversion step is arithmetic only and does not establish whether the rate or its basis is supported.
Option C: Rounding to $100 substitutes for checking the rate and basis.
Option C says rounding to $100 substitutes for checking the rate and basis. Rounding affects presentation, not support; an unsupported rate remains unsupported after rounding.
Evidence Fits the Increment
A site rate is defensible only when the market evidence matches the size of the extra land and the range of competing sites.
How to use: Use this when choices offer labels, formulas or rounding as substitutes for market support.
Exam Tip
Look for the answer that ties the adjustment to relevant market evidence; procedural steps alone do not make an adjustment credible.
Common Mistakes to Avoid
- -Treating a paired-data label as proof of support
- -Assuming one marginal rate applies to all lot sizes
- -Believing rounding or conversion validates an adjustment
Concept Deep Dive
Analysis
This question tests what gives an incremental site-area adjustment credibility. A marginal rate is defensible when relevant market evidence supports applying it to the specific additional area and the competitive range of site sizes. Labels, conversion steps and rounding do not establish the rate or its applicability.
Background Knowledge
Site size adjustments often use a marginal rate per square foot or per acre for the difference between the subject and the comparable. Because the market may pay different amounts for additional land at different sizes, the rate should be supported by evidence relevant to the incremental area and competitive site range.
Real-World Application
Comparing a 10,000 sf subject lot to a 14,000 sf comparable, an appraiser analyzes sales within the 8,000 to 16,000 sf range to support a marginal rate for the extra area. The appraiser documents why that rate fits this increment.
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