An appraiser completes a URAR form and determines that a subject property's bathroom count adjustment should be $8,000. The subject has 2.5 baths and a comparable has 2.0 baths. What adjustment should be made to the comparable's sale price?
Correct Answer
A) +$4,000
Since the comparable has 0.5 fewer baths than the subject, and the full bathroom adjustment is $8,000, the comparable needs a +$4,000 adjustment (0.5 × $8,000) to make it equivalent to the subject property.
Why This Is the Correct Answer
Option A is correct because the comparable has 0.5 fewer bathrooms than the subject (2.0 vs 2.5). Since the full bathroom adjustment value is $8,000, the proportional adjustment for half a bathroom is $4,000 (0.5 × $8,000). Because the comparable is inferior to the subject in this feature, we add $4,000 to the comparable's sale price to make it equivalent to the subject.
Why the Other Options Are Wrong
Option B: +$8,000
This applies the full $8,000 adjustment without accounting for the fact that the difference is only 0.5 bathrooms, not a full bathroom. The adjustment must be proportional to the actual difference between properties.
Option C: -$4,000
This uses the correct dollar amount ($4,000) but applies it as a negative adjustment, which would be used if the comparable were superior to the subject. Since the comparable has fewer baths, it needs a positive adjustment.
Option D: -$8,000
This incorrectly applies both the full adjustment amount and the wrong direction. It uses $8,000 (should be $4,000 for half bath difference) and subtracts it (should add since comparable is inferior).
The COMPASS Rule
COMPASS: Comparable Minus Subject = Positive Adjustment, Subject minus Comparable = Subtract. If Comparable < Subject, ADD to comparable. If Comparable > Subject, SUBTRACT from comparable.
How to use: When you see an adjustment question, first determine which property has more of the feature, then apply COMPASS to determine if you add or subtract, and calculate the proportional amount based on the actual difference.
Exam Tip
Always identify the direction of adjustment first (+ or -) by comparing which property is superior, then calculate the proportional amount based on the actual difference between properties.
Common Mistakes to Avoid
- -Applying the full adjustment amount without considering proportional differences
- -Getting the direction wrong (adding when should subtract or vice versa)
- -Forgetting that adjustments are always made TO the comparable, not the subject
Concept Deep Dive
Analysis
This question tests the fundamental concept of making adjustments in the sales comparison approach when using the URAR form. The key principle is that adjustments are always made TO the comparable property's sale price to make it equivalent to the subject property. When a comparable has fewer amenities than the subject, you add value to the comparable; when it has more amenities, you subtract value. The adjustment amount must be proportional to the difference in features between the properties.
Background Knowledge
In the sales comparison approach, adjustments are made to comparable sales to account for differences between the comparable and subject property. The fundamental rule is: if the comparable is inferior to the subject in a particular feature, add value; if superior, subtract value.
Real-World Application
In practice, appraisers must make numerous adjustments for differences in bathrooms, bedrooms, square footage, and other features. Each adjustment must be supported by market data and applied proportionally to reflect the actual difference between properties.
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