After adjustment, one comparable indicates a value 12% above the other three, which cluster tightly. The appraiser should:
Correct Answer
D) Re-examine it for a missed adjustment or unusual circumstance
Why this is correct: The correct answer, 'Re-examine it for a missed adjustment or unusual circumstance,' is the proper analytical step. An outlier after adjustment signals a potential error in the analysis (e.g., missed concession, incorrect adjustment) or that the sale is not truly comparable (e.g., atypical motivation). It must be investigated, not ignored or automatically discarded. Why the other choices are wrong: 'Include it at equal weight, since it was properly adjusted too' is wrong; an outlier suggests it may *not* have been properly adjusted. 'Raise the conclusion to the midpoint between it and the cluster' is wrong; this is an unsupported mechanical averaging. 'Delete it from the report so reviewers do not question it' is wrong; selectively omitting data is unethical. Exam tip: An outlier is a red flag to check your work. Don't ignore it; investigate it.
Why This Is the Correct Answer
Option D is right because an outlier after adjustment is evidence of a problem to be found, not a number to be accommodated. Re-examination means going back to the verification, the property characteristics, and the adjustment derivation for that sale specifically. If the investigation finds and corrects an error, the indication usually moves toward the cluster and the grid gets stronger. If it finds that the sale is genuinely different in kind - a different buyer pool, atypical motivation, a transaction that was not arm's length - the appraiser has a documented, defensible reason to give it little or no weight and says so in the report.
Why the Other Options Are Wrong
Option A: Include it at equal weight, since it was properly adjusted too
Equal weighting assumes the adjustments were correct, which is the very thing the dispersion calls into question. Reconciliation weighs indications by the quality of the data and analysis behind each, and an unexplained twelve percent divergence is direct evidence that this one may be weaker. Treating all indications as interchangeable abandons the weighting judgment that reconciliation exists to exercise.
Option B: Raise the conclusion to the midpoint between it and the cluster
Splitting the difference between an outlier and a cluster is mechanical averaging with an extra step, and it produces a conclusion no individual sale supports. It also silently raises the value opinion by an amount driven entirely by the suspect data point. Nothing about the midpoint reflects any market participant's behavior.
Option C: Delete it from the report so reviewers do not question it
Deleting a sale to avoid scrutiny is the reverse of appraisal practice; data are excluded for stated analytical reasons, and the reasoning appears in the workfile and, where relevant, in the report. Suppressing evidence because it is inconvenient is misleading and reaches the ETHICS RULE, which requires impartiality and prohibits communicating results in a misleading manner. The workfile must contain the data and analysis supporting the conclusion, which means the reasoning for exclusion has to exist somewhere.
The stray sale is a smoke alarm
An outlier is a smoke alarm, not a nuisance. You do not average the alarm with the silence and you do not pull the battery out. You go look for the fire - a missed concession, a missed feature, a wrong adjustment, or a sale that never belonged in the set.
How to use: When a stem describes one indication diverging from a cluster, choose the investigate answer. Only after investigation do the other paths become legitimate, and then each requires a stated reason: corrected and retained, retained with low weight, or excluded with the reason documented.
Exam Tip
Tight dispersion among adjusted indications is evidence your adjustments are market-derived; treat it as a self-check on every grid you build, not just on exam questions.
Common Mistakes to Avoid
- -Averaging an outlier in rather than investigating it
- -Dropping a sale without documenting the analytical reason
- -Assuming the adjustments were right and the market was odd
- -Skipping re-verification of concessions and non-realty items
Concept Deep Dive
Analysis
This question tests how an appraiser reads a dispersed data set. Adjustment exists to eliminate differences, so when three of four adjusted indications cluster and the fourth sits twelve percent above them, the adjustments on that fourth sale have not done their job - or the sale is telling you something the others cannot. Both possibilities point the same direction: investigate. The likely explanations are finite and checkable. A concession or non-realty item may not have been backed out; a characteristic may have been missed on the inspection or in the data source; the adjustment amounts applied may be wrong for that particular property; the transaction may not have been arm's length; or the sale may reflect a submarket or buyer type the others do not. The dispersion of adjusted indications is in fact one of the best available diagnostics on the quality of a grid, which is why a tight cluster with one stray is a signal rather than a nuisance.
Background Knowledge
You need the ordered steps of the sales comparison approach, especially verification of transaction terms including concessions and personal property, and the use of dispersion among adjusted indications as a diagnostic of adjustment quality. You should also know the reconciliation criteria in USPAP Standards Rule 1-6, the RECORD KEEPING RULE's requirement for a workfile containing the data and analysis supporting the conclusion, and the ETHICS RULE's prohibition on misleading communication.
Real-World Application
An appraiser re-verifies a stray sale and learns from the listing agent that a detached shop building on the site was never entered in the multiple listing data. Adding the shop adjustment brings the indication within two percent of the other three, and the corrected grid supports a materially tighter conclusion.
More Sales Comparison Questions
Excess land differs from surplus land in that excess land:
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Paired sales are drawn from transactions six months apart in a stable market. The time adjustment needed is:
The most appropriate unit of comparison is determined by:
A comparable superior to the subject in every adjusted category should produce an indication that is:
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Why is a foreclosure sale generally a poor comparable in a stable market?
A comparable sold 8 months ago for $250,000 in a market appreciating 6% per year. What is the time-adjusted price?