Adjustments for property rights conveyed, cash equivalence (financing) and non-real property items are usually made to the total sale price. How are these adjustments typically expressed?
Correct Answer
B) In terms of dollars
Adjustments for property rights conveyed, cash equivalence and non-real property items are typically made in dollars to the total sale price, because each reflects a specific dollar amount, such as the value of personal property included in the sale or the cash equivalent of non-market financing.
Why This Is the Correct Answer
Option B is correct because adjustments for property rights and interests, cash equivalence and non-real property items are typically made in dollars. Each reflects a specific amount, such as the value of personal property included in the sale or the cash equivalent of non-market financing. They are applied to the total sale price.
Why the Other Options Are Wrong
Option A: As percentages of the unit price
Option A expresses them as percentages of the unit price. These items are specific amounts tied to the total transaction, so they are typically stated in dollars rather than as percentages of a unit price.
Option C: As qualitative rankings
Option C expresses them as qualitative rankings. Qualitative rankings like superior or inferior do not quantify the dollar amount of items such as included personal property or financing effects.
Option D: As multiplicative factors
Option D expresses them as multiplicative factors. These items reflect specific dollar amounts, so they are typically handled as dollar adjustments rather than factors applied to the price.
Transaction items, dollar items
Rights, financing and personal property are specific pieces of the deal, so they come out in dollars.
How to use: Use this when asked how property rights, cash equivalence or non-realty adjustments are expressed.
Exam Tip
When a question lists property rights, cash equivalence and non-real property items together, think dollar adjustments to the total price.
Common Mistakes to Avoid
- -Applying a percentage to a unit price for personal property
- -Using qualitative rankings for items that have identifiable dollar amounts
- -Making non-realty adjustments after unit-price adjustments instead of to the total price
Concept Deep Dive
Analysis
This question tests how certain transactional adjustments are expressed. Property rights conveyed, cash equivalence and non-real property items each represent specific dollar amounts affecting the total price. They are therefore typically made in dollars to the total sale price.
Background Knowledge
Transactional adjustments, such as property rights, financing terms and non-realty items, are often made first, to the total sale price. They reflect identifiable amounts within the transaction. Later adjustments for market conditions and property characteristics may use dollars or percentages.
Real-World Application
A comparable sold for $325,000 including furniture worth about $5,000. The appraiser makes a −$5,000 adjustment to the total sale price before applying other adjustments.
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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