An appraiser develops a $3,200 adjustment for a fireplace based on a single paired sale. The subject has a fireplace; Comparable A does not. The appraiser applies +$3,200 to Comparable A. Later, the appraiser identifies a second pair showing a $4,600 fireplace contribution. The appraiser replaces the original adjustment with $3,900 — the simple average — and applies it to Comparable A. What is the appropriate USPAP-compliant action regarding the adjustment amount?
Correct Answer
C) Evaluate the evidence and explain a supported reconciliation of the paired indications
Evaluate verification, segment applicability, timing and other controlled influences before reconciling the two paired indications. An equal mean can be supported when equal reliance is justified; two observations alone do not prove statistical reliability or impose a particular weighting formula.
Why This Is the Correct Answer
Option C is correct because each pair's reliability depends on verification, market segment, timing and how well other differences were controlled. After evaluating that evidence, the appraiser reconciles the $3,200 and $4,600 indications and explains the basis for the adjustment chosen, which could be an equal mean if equal reliance is justified.
Why the Other Options Are Wrong
Option A: Average the two pairs, since two observations give a reliable indication of contribution
Option A averages the pairs on the reasoning that two observations give a reliable indication. Two observations alone do not establish reliability, and an equal average is appropriate only if analysis shows the pairs deserve equal weight.
Option B: Use the newer pair and disregard the older indication
Option B uses the newer pair and disregards the older indication without analysis. Being newer does not by itself make a pair more reliable, so dropping the $3,200 indication is not supported.
Option D: Discard both pairs because USPAP mandates at least three pairs
Option D discards both pairs because USPAP supposedly mandates at least three pairs. USPAP sets no minimum number of paired sales; it requires that adjustments be supported and the analysis be credible.
Weigh pairs, do not just average
Treat each paired sale as evidence to be judged for quality before deciding how to combine them.
How to use: Use this when two paired-sales results disagree on an adjustment.
Exam Tip
Look for the answer that calls for evaluating and explaining the evidence rather than one that applies a fixed formula or an invented minimum count.
Common Mistakes to Avoid
- -Assuming two observations prove statistical reliability
- -Discarding an older pair just because it is older
- -Believing USPAP requires a minimum number of paired sales
Concept Deep Dive
Analysis
This question tests how to reconcile two paired-sales indications for the same feature. The appraiser needs to evaluate the quality of each pair, including verification, timing and whether other influences were controlled, and then explain a supported reconciliation rather than rely on a mechanical rule.
Background Knowledge
Paired sales analysis isolates the value of a single feature by comparing sales that differ mainly in that feature. Each pair should be checked for verification, timing and other uncontrolled differences. When pairs give different results, the appraiser reconciles them and explains why the chosen adjustment is supported.
Real-World Application
An appraiser finds one fireplace pair showing $3,200 and a second showing $4,600. On review, the second pair's sales were a few months apart in a rising market, so the appraiser gives more weight to the first pair and explains that reasoning in the report.
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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