An appraiser is ranking four sales against a subject in average condition on an interior street. All four homes are similar to the subject in size and sold within the last three months. Sale 1 was renovated and is on a similar interior street. Sale 2 was renovated and backs onto a highway. Sale 3 needs repairs and backs onto a golf course. Sale 4 needs repairs and is on a similar interior street. Market data do not measure the effect of either condition or location. Which sale can be ranked superior to the subject overall?
Correct Answer
A) Sale 1
Sale 1 is superior in condition and similar in location, so it is better than the subject on balance with no offsetting difference. Sales 2 and 3 are each superior in one element and inferior in the other, and without market evidence of which difference matters more, neither can be ranked overall. Sale 4 is inferior in condition and similar in location, so it ranks inferior, not superior.
Why This Is the Correct Answer
Option A is correct because Sale 1 is better than the subject in condition and equal in location, so nothing pulls it back toward or below the subject. Its overall ranking as superior follows from the direction of the differences alone.
Why the Other Options Are Wrong
Option B: Sale 2
Option B, Sale 2, is renovated but backs onto a highway, so it is superior in condition and inferior in location. With no data on which effect is larger, its overall ranking cannot be set.
Option C: Sale 3
Option C, Sale 3, has the better golf course location but needs repairs. Its superior location and inferior condition pull in opposite directions, so it cannot be ranked superior without evidence of their relative size.
Option D: Sale 4
Option D, Sale 4, needs repairs and is on a similar interior street. It is inferior in condition and similar in location, which makes it inferior to the subject overall.
Same direction, clear ranking
If every difference points the same way, or the rest are similar, the overall ranking is clear. Mixed arrows need market evidence.
How to use: Use it to sort a grid of superior, similar and inferior ratings into overall rankings.
Exam Tip
Check each sale for offsetting differences before ranking it overall. A sale with one plus and one minus is not similar by default.
Common Mistakes to Avoid
- -Treating one superior and one inferior element as offsetting each other
- -Ranking a sale on condition alone and ignoring location
- -Assuming a golf course location outweighs needed repairs
Concept Deep Dive
Analysis
The question tests ranking when more than one element differs. A sale can be ranked overall only when its differences point the same way, or when one side is similar. Where one element is superior and another inferior, the net result depends on magnitudes the market data here do not provide.
Background Knowledge
Condition and location are attributes that are often hard to measure in dollars. Ranking combines the direction of each difference into an overall rating, which is clear only when the differences do not conflict.
Real-World Application
An appraiser compares a dated home on a quiet street with renovated sales, some on busy roads. Only the renovated sale on a quiet street is ranked superior with confidence; the others are noted as mixed until more data show how buyers trade off condition and traffic.
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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Previous Question
An appraiser is valuing a 3,300-square-foot custom home in a subdivision of one-story tract homes. A regression of 52 subdivision sales, which range from 1,150 to 2,050 square feet, gives sale price = $71,000 + $104 × GLA with an R-squared of 0.84. The appraiser applies the line to the subject and reports $414,200 as the indicated value. What is the main weakness in this analysis?
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