The adjusted comparable indications in an appraisal are $296,000, $301,000 and $304,000. The appraiser has no information on differences in reliability and has assigned no weights. What can be concluded from these figures alone?
Correct Answer
D) They give a range that needs reasoned reconciliation
The three indications identify an observed range from $296,000 to $304,000. Their closeness does not establish that a particular unweighted central figure is uniquely correct, nor prove data quality. Reconcile comparability and evidence supporting relative reliance. An unsupported safety deduction or added market movement is not justified by these numbers alone.
Why This Is the Correct Answer
Option D is correct because the indications define a range from $296,000 to $304,000, and choosing a specific value within it requires reconciliation of comparability and reliability. USPAP calls for summarizing the reasoning supporting the conclusions, including reconciliation of the data. The figures alone do not justify a single point.
Why the Other Options Are Wrong
Option A: A safety discount makes $290,000 the one correct value
Option A is wrong because a safety discount that makes $290,000 the one correct value is an unsupported deduction. $290,000 falls below the lowest indication of $296,000 and does not follow from the facts.
Option B: The highest indication is the one to be selected
Option B is wrong because selecting the highest indication, $304,000, has no basis when no reliability differences are given. Choosing the high figure by rule is not reconciliation.
Option C: An added market allowance makes $310,000 the final value
Option C is wrong because an added market allowance that makes $310,000 the final value adds an amount the data do not show. $310,000 lies above the highest indication of $304,000 and does not follow from these figures.
Range first, reasons second
Adjusted indications give you the range; reasons give you the point. No reasons, no point.
How to use: Use this phrase when a question asks what can be concluded from adjusted indications alone.
Exam Tip
Options that add an unexplained discount or allowance to move outside the indicated range are usually unsupported.
Common Mistakes to Avoid
- -Applying a safety discount to protect the lender
- -Picking the highest indication without justification
- -Adding a market allowance without evidence of market movement
Concept Deep Dive
Analysis
This question tests what adjusted indications alone can support. Three figures of $296,000, $301,000 and $304,000 with no weights or reliability differences establish a range, but a specific conclusion still requires reasoned reconciliation. Arbitrary discounts, premiums or picking the high figure lack support.
Background Knowledge
Reconciliation weighs the quality and quantity of evidence behind each indication to arrive at a supported conclusion. Close indications suggest consistency but do not prove that any particular central figure is the answer. Adjustments for market movement or risk must be supported by evidence, not added by habit.
Real-World Application
An appraiser has three adjusted sales within $8,000 of each other. Rather than averaging or choosing the highest, she examines which sale is most similar and best verified, and explains why her final figure within the range is supported.
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?
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Previous Question
The two-story home being appraised has 1,750 square feet of above-grade gross living area and a 400-square-foot finished basement. A simple linear regression of 41 recent sales of competing two-story homes, ranging from 1,300 to 2,300 square feet of above-grade GLA, gives: sale price = $48,500 + $132 × above-grade GLA. None of the 41 sales has a finished basement. The sales averaged $165 per square foot of above-grade GLA. What sale price does the model predict for the subject before any adjustment for the basement?
Next Question
A verified pair of cash-equivalent sales in the same market has Q2/C3 at $648,000 and Q5/C3 at $558,000. Rights, terms, time and other material characteristics are matched. A suitable comparable sold for $520,000. The subject is Q2/C3; the comparable is Q5/C3. Assume the observed contribution applies and no other adjustments. What signed quality adjustment and adjusted comparable price result?