An appraiser is valuing a 2,400 square foot home. Comparable sales show a $45 per square foot adjustment is appropriate for size differences. If a comparable sale is 2,100 square feet and sold for $385,000, what is the adjusted sale price?
Correct Answer
D) $398,500
Why this is correct: The subject is 2,400 sq ft, the comparable is 2,100 sq ft. The size difference is 300 sq ft. Since the comparable is smaller, an upward adjustment is needed. Adjustment amount = 300 sq ft * $45/sq ft = $13,500. Adjusted sale price = $385,000 + $13,500 = $398,500. Why the other choices are wrong: "$371,500" would result from a downward adjustment (subtracting $13,500). "$372,000" uses an incorrect adjustment calculation. "$398,000" is close but off by $500, likely from a rounding error. Exam tip: In sales comparison, always adjust the comparable to the subject. If the comparable is inferior, add value; if superior, subtract.
Why This Is the Correct Answer
Option A is correct because it properly applies the adjustment methodology. The comparable at 2,100 sq ft is 300 sq ft smaller than the subject at 2,400 sq ft, making it inferior in size. Since the comparable is smaller (inferior), we must adjust upward by 300 sq ft × $45/sq ft = $13,500. Adding this to the sale price: $385,000 + $13,500 = $398,500.
Why the Other Options Are Wrong
COMPASS Method
C-O-M-P-A-S-S: Compare sizes, Opposite adjustment (smaller comp = upward adjustment), Multiply difference by rate, Plus or minus to sale Price, Arrive at Adjusted price, Subject is the Standard, Sale price gets modified
How to use: When you see a size adjustment question, immediately identify which property is larger, remember that adjustments go in the opposite direction (smaller comp needs upward adjustment), then multiply the difference by the given rate and apply to the comparable's sale price.
Exam Tip
Always write down the subject property size first, then the comparable size, and clearly mark which is larger before calculating - this prevents directional errors in adjustments.
Common Mistakes to Avoid
- -Adjusting in the wrong direction (subtracting when should add)
- -Calculating the square footage difference incorrectly
- -Using the wrong per-square-foot adjustment rate or making arithmetic errors
Concept Deep Dive
Analysis
This question tests the fundamental concept of making adjustments in the sales comparison approach to appraisal. When using comparable sales, appraisers must adjust for differences between the subject property and the comparables to arrive at an indicated 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 inferior to the subject (smaller, fewer features, etc.), an upward adjustment is made; if superior, a downward adjustment is applied.
Background Knowledge
The sales comparison approach requires adjustments to comparable sales to account for differences between the comparables and the subject property. Adjustments are always made TO the comparable sale price, with upward adjustments for inferior features and downward adjustments for superior features. The goal is to estimate what the comparable would have sold for if it had been identical to the subject property.
Real-World Application
In practice, appraisers regularly make size adjustments when comparable sales differ from the subject property. Market data analysis helps determine appropriate per-square-foot adjustments based on paired sales analysis, where similar properties with different sizes are compared to extract adjustment rates.
More Sales Comparison Questions
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