Two verified otherwise identical cash-equivalent sales differ only in finishing 1,200 square feet of basement. They sold for $432,000 finished and $408,000 unfinished in a stable market. What per-square-foot finish contribution does the pair indicate? A subject has 1,000 square feet, but no transfer or adjustment amount is requested.
Correct Answer
B) 20.00
(432000 − 408000) / 1200 = 20 per square foot; the subject’s 1000 square feet is not the denominator. Common errors: dividing by the subject’s 1,000 square feet instead of the pair’s 1,200 gives 24.00; dividing the finished sale price by the area gives 360.00; dividing by both areas gives 10.91.
Why This Is the Correct Answer
Option B is correct because ($432,000 - $408,000) / 1,200 = $24,000 / 1,200 = 20.00 per square foot. The pair differs only in the 1,200 square feet of basement finish, so that area is the correct denominator. The subject's 1,000 square feet would matter only when applying the rate, which the question does not ask for.
Why the Other Options Are Wrong
Option A: 10.91
Option A is wrong because 10.91 comes from 24,000 / (1,200 + 1,000) = 24,000 / 2,200, dividing by both areas combined. The rate comes from the pair alone: 24,000 / 1,200 = 20.00.
Option C: 24.00
Option C is wrong because 24.00 comes from 24,000 / 1,000, dividing by the subject's 1,000 square feet instead of the pair's 1,200. The correct rate is 24,000 / 1,200 = 20.00.
Option D: 360.00
Option D is wrong because 360.00 comes from 432,000 / 1,200, dividing the finished sale price by the finished area. The contribution comes from the price difference: (432,000 - 408,000) / 1,200 = 20.00.
Pair's gap over pair's area
Take the price gap between the two sales and divide it by the area that differs between those same two sales. The subject waits until you apply the rate.
How to use: Use this rule when a paired-sales problem includes extra subject data that is not part of the rate calculation.
Exam Tip
Identify which figures belong to the pair and which belong to the subject before calculating. Questions often add subject data as a distractor.
Common Mistakes to Avoid
- -Dividing the price difference by the subject's area
- -Dividing a full sale price by the area instead of the price difference
- -Combining the pair's and subject's areas in the denominator
Concept Deep Dive
Analysis
This question tests extracting a per-square-foot rate from a paired sale. The price difference between the finished and unfinished basement sales is divided by the 1,200 square feet of finish in the pair. The subject's 1,000 square feet is a distractor because no adjustment for the subject is requested.
Background Knowledge
Paired sales can support adjustment rates by isolating the price effect of a single difference. The rate is derived from the characteristics of the paired sales themselves, and only then applied to the difference between each comparable and the subject.
Real-World Application
An appraiser finds two nearly identical homes in a stable subdivision, one with a finished basement and one without. The appraiser divides the price difference by the finished area to get a per-square-foot rate, then later applies it to each comparable's basement-finish difference from the subject.
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?
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Cost Approach
13.6% of exam
Income Approach
8.2% of exam
Previous Question
Fannie Mae expects comparables that closed within the last 12 months. When can an older sale be the better choice?
Next Question
The subject is a single-family home with its own private driveway. Comparable 3 sold subject to a recorded easement that lets the neighboring owner use its driveway to reach a rear garage. Paired sales in the neighborhood show homes burdened by such shared-driveway easements sell for about $8,000 less than similar homes without them. Which adjustment applies to Comparable 3?