An appraiser is completing a retrospective appraisal of a house for an estate, with an effective date of March 1, 2026, the date of the owner's death. Comparable 3 went under contract on June 1, 2026, and closed on July 1, 2026, at $412,000. Paired resales of unchanged homes in the neighborhood show values rising at a simple rate of 0.5% per month from January through August 2026, while a county index for all property types rose 0.2% per month. The report is being written in November 2026. What is Comparable 3's time-adjusted price?
Correct Answer
B) $405,820
A time adjustment brings a sale to the market conditions on the effective date, measured from the sale's contract date. Comparable 3 went under contract three months after the March 1 effective date in a rising market, so its price reflects a higher market and is adjusted down: 3 x 0.5% = 1.5%, and $412,000 x (1 - 0.015) = $405,820. Counting to the closing date gives $403,760, the county index for all property types gives $409,528, and adjusting forward to the November report date gives $422,300.
Why This Is the Correct Answer
Option B is correct because Comparable 3 went under contract three months after the March 1 effective date while values rose 0.5% a month. Its price reflects a market 1.5% higher than on the effective date, so $412,000 x 0.985 = $405,820.
Why the Other Options Are Wrong
Option A: $403,760
Option A, $403,760, counts four months to the July 1 closing date: $412,000 x 0.98. The price was set when the contract was signed, so the span runs from June 1, three months, giving $405,820.
Option C: $409,528
Option C, $409,528, applies the county index for all property types: $412,000 x (1 - 0.006). The paired resales of unchanged homes in the neighborhood measure the subject's own market, which rose 0.5% a month, giving $405,820.
Option D: $422,300
Option D, $422,300, adjusts upward to the November report date: $412,000 x 1.025. The report date does not matter; a retrospective appraisal values the property as of March 1, so the later sale is adjusted down to $405,820.
Move the sale to the date
Every comparable travels to the effective date: back in time in a rising market means down, forward in time means up.
How to use: Use this when a comparable's contract date falls after the effective date, as in a retrospective appraisal.
Exam Tip
Find the effective date first and ignore the report date. Then decide whether the comparable is moving forward or backward in a rising or falling market.
Common Mistakes to Avoid
- -Adjusting a later sale upward in a rising market
- -Measuring time from the closing or report date
- -Using a broad county trend instead of the subject's market
Concept Deep Dive
Analysis
The question tests the direction and span of a market conditions adjustment when the comparable sold after the effective date. In a rising market, a later sale reflects higher prices than existed on the effective date, so it is adjusted downward. The span runs from the contract date to the effective date, using the trend for the subject's own property type.
Background Knowledge
Comparable sales are adjusted to reflect the market conditions on the effective date of the appraisal, measured from the time each comparable went under contract. When the effective date is in the past, sales after it can serve as comparables, and in a rising market they are adjusted down. The rate should come from data on the same property type and market as the subject.
Real-World Application
An appraiser values a home for an estate as of the date of death, eight months earlier. Several of the best comparables went under contract after that date in a rising market, so she adjusts them downward using the neighborhood's resale trend.
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?
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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?
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