An appraiser ranks five recent sales of three-bedroom townhouses against the subject on overall desirability. Sale 1, $384,000, and Sale 2, $397,000, are inferior. Sale 3, $401,000, and Sale 5, $404,000, are judged equal to the subject. Sale 4, $412,000, is superior. What value range does the ranking most strongly indicate?
Correct Answer
D) $401,000 to $404,000
Two sales tie with the subject as equal overall, so they are the most comparable sales and narrow the indication to their prices, $401,000 to $404,000. The bracket of $397,000 to $412,000 between the nearest inferior and superior sales still holds but is wider than the evidence requires. The full $384,000 to $412,000 range and the range between the two inferior sales do not reflect the subject's position.
Why This Is the Correct Answer
Option D is correct because Sales 3 and 5 are judged equal to the subject overall, so their prices of $401,000 and $404,000 are the most direct indications. The range they set falls inside the $397,000 to $412,000 bracket and is the narrowest range the ranking supports.
Why the Other Options Are Wrong
Option A: $384,000 to $397,000
Option A, $384,000 to $397,000, places the subject between Sales 1 and 2, but the subject ranks above both inferior sales.
Option B: $384,000 to $412,000
Option B, $384,000 to $412,000, is simply the range of all five prices and does not use the ranking.
Option C: $397,000 to $412,000
Option C, $397,000 to $412,000, is the bracket between the nearest inferior and superior sales. It is consistent with the ranking but ignores the two sales tied with the subject, which narrow the range further.
Ties tighten the bracket
Sales tied with the subject are the closest fit, so their prices pull the bracket's walls inward.
How to use: Use this when a ranking includes sales judged equal to the subject.
Exam Tip
Look first for sales ranked equal to the subject; if there are any, the best range comes from them, checked against the nearest superior and inferior sales.
Common Mistakes to Avoid
- -Ignoring sales ranked equal to the subject
- -Reporting the range of all sales as the indicated range
- -Placing the subject between two inferior sales
Concept Deep Dive
Analysis
The question tests narrowing a ranked array. The nearest inferior and superior sales set an outer bracket, but sales judged equal to the subject are the most comparable and set a tighter range inside it.
Background Knowledge
Ranked sales can fall above, below or equal to the subject. When one or more sales are judged equal, they carry the most weight because they are the most comparable, and the outer bracket from the nearest superior and inferior sales serves as a check.
Real-World Application
In a townhouse community with several identical floor plans, two recent sales match the subject closely and sold within $3,000 of each other. The appraiser uses them to narrow the range and cites the higher and lower sales as the outer bracket.
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 home for the executor of an estate; no lender is involved. Comparable 3, a brick ranch, sold for $348,000. In this county, sellers customarily pay the transfer tax and the owner's title policy, but in this sale the buyer agreed to pay those costs, $6,800 in total, in return for a lower price. The buyer also paid $4,200 of closing costs that buyers customarily pay here. Paired sales and agent interviews show that when buyers take on the seller's customary costs, prices are about $6,000 lower than they would otherwise be. What is Comparable 3's price after adjustment for this term of sale?
Next Question
Two verified sales are alike in every respect except that one has a two-car garage. They sold for $265,000 (with garage) and $252,000 (without). A comparable lacks the garage that the subject has. What adjustment does this pair indicate?