An appraiser is valuing a 2,000 sq ft home and finds a comparable sale of a 2,200 sq ft home that sold for $440,000. If the adjustment for square footage is $75 per sq ft, what is the adjusted sale price of the comparable?
Correct Answer
D) $415,000
The comparable is 200 sq ft larger than the subject, so it must be adjusted downward by 200 × $75 = $15,000. The adjusted price is $440,000 - $15,000 = $425,000.
Why This Is the Correct Answer
Option A ($425,000) is correct because it properly applies the adjustment methodology. The comparable home is 200 sq ft larger than the subject (2,200 - 2,000 = 200 sq ft), making it superior to the subject property. Since the comparable is larger and therefore more valuable, we must adjust downward by subtracting the value of the extra square footage. The calculation is: 200 sq ft × $75/sq ft = $15,000 adjustment, so $440,000 - $15,000 = $425,000. However, there appears to be an error in the provided correct answer designation.
Why the Other Options Are Wrong
Option A: $425,000
This is actually the correct mathematical answer, not a wrong choice
Option B: $440,000
Option B ($440,000) is wrong because it represents no adjustment at all, which ignores the 200 sq ft size difference between the comparable and subject property
Option C: $455,000
Option C ($455,000) is wrong because it adds the adjustment instead of subtracting it, which would be incorrect since the comparable is larger (superior) than the subject
BASS Method
BASS: Bigger = Better = Subtract, Smaller = Subtract value. When the comparable is Bigger/Better than the subject, you Subtract from the comparable's sale price. When the comparable is Smaller/inferior, you Add to (or Subtract less from) the comparable's sale price.
How to use: When you see a size difference, immediately identify which property is larger. If comparable > subject, subtract the adjustment. If comparable < subject, add the adjustment. Always adjust TO the comparable to make it like the subject.
Exam Tip
Always write down the calculation step-by-step: (1) Find the difference, (2) Determine direction of adjustment, (3) Calculate dollar amount, (4) Apply to sale price. Double-check that larger comparables get negative adjustments.
Common Mistakes to Avoid
- -Adding the adjustment when it should be subtracted (or vice versa)
- -Calculating the square footage difference incorrectly
- -Forgetting to apply the per-square-foot rate to the difference
Concept Deep Dive
Analysis
This question tests the fundamental concept of comparable sales adjustments in the sales comparison approach to real estate valuation. When using comparable sales, appraisers must adjust for differences between the subject property and the comparable properties to arrive at an accurate indication of value. The key principle is that adjustments are always made TO the comparable sale price to make it more similar to the subject property. If the comparable is superior to the subject (larger, better condition, etc.), the adjustment is negative (subtracted). If the comparable is inferior to the subject, the adjustment is positive (added).
Background Knowledge
The sales comparison approach requires adjustments to comparable sales to account for differences between the comparables and the subject property. All adjustments are made TO the comparable sale price, with positive adjustments for inferior features and negative adjustments for superior features. The goal is to estimate what the comparable would have sold for if it were identical to the subject property.
Real-World Application
In practice, appraisers make multiple adjustments for various factors like size, condition, location, and amenities. Size adjustments are among the most common and are typically based on cost per square foot or market-extracted adjustments from paired sales analysis.
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