After all adjustments, what does each adjusted comparable sale price represent?
Correct Answer
A) The price the comparable would have brought with the subject’s key traits
The adjusted prices estimate what the comparable properties would have sold for had they possessed all of the important characteristics of the subject property.
Why This Is the Correct Answer
Option A is correct because the adjusted comparable prices are estimates of what the comparable properties would have sold for had they possessed all of the important characteristics of the subject property. Together they form a range of value indications for the subject.
Why the Other Options Are Wrong
Option B: The price the comparable’s owner would accept if it were listed today
Option B describes the price the comparable's owner would accept if listed today. Adjustments estimate a market price for the comparable with the subject's traits, not an individual owner's asking or acceptance price.
Option C: The assessed value of the comparable as of the effective date
Option C describes the comparable's assessed value as of the effective date. Assessed value is a tax figure and is not what sales comparison adjustments produce.
Option D: The average price in the neighborhood on the comparable’s date of sale
Option D describes the average neighborhood price on the comparable's sale date. Adjusted prices are specific to each comparable and reflect the subject's characteristics, not a neighborhood average.
Comp Wearing Subject's Clothes
An adjusted price is the comparable's sale price as if it were dressed in all of the subject's important features.
How to use: Use this to remember what each adjusted comparable price represents in the grid.
Exam Tip
Adjusted prices are indications of the subject's value from each comparable, not assessed values, asking prices or neighborhood averages.
Common Mistakes to Avoid
- -Treating adjusted prices as the comparables' current listing prices
- -Confusing adjusted sale prices with assessed values
- -Adjusting the subject instead of the comparables
Concept Deep Dive
Analysis
This question tests the meaning of an adjusted comparable sale price. Each adjustment moves the comparable's price toward what it would be if the comparable matched the subject. The final adjusted price is an estimate of what that comparable would have sold for with the subject's important characteristics.
Background Knowledge
In the sales comparison approach, adjustments convert each comparable's sale price into an indication of the subject's value. The adjusted prices are then reconciled into a single value indication, giving most weight to the most reliable comparables.
Real-World Application
After adjusting three sales for size, condition and garage differences, an appraiser has adjusted prices of $412,000, $418,000 and $420,000. Each represents what that sale would likely have brought if it had the subject's features, and the appraiser reconciles them into one indication.
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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