An appraiser uses paired sales to measure a feature, but the two sales also differ in another characteristic. What must be true for the result to be usable?
Correct Answer
D) The other difference must already be adjusted for
If sold properties differ in more than one characteristic, adjustments must already have been made for the characteristics other than the one being measured; this is less reliable than a true matched pair.
Why This Is the Correct Answer
Option D is correct because when sold properties differ in more than one characteristic, adjustments must already have been made for the characteristics other than the one being measured. This approach is less reliable than a true matched pair, but it allows the target feature to be isolated.
Why the Other Options Are Wrong
Option A: The other difference must simply be ignored
Option A says the other difference must simply be ignored. Ignoring it would mix its effect into the measured feature and distort the result.
Option B: The two sales must be drawn from different markets
Option B requires the two sales to be drawn from different markets. Drawing sales from different markets would add another uncontrolled difference rather than isolating the feature.
Option C: The result must be doubled to offset the other difference
Option C says the result must be doubled to offset the other difference. Doubling has no analytical basis; the other difference must be adjusted using its own supported amount.
Clear the others first
To measure one feature, every other difference must already be adjusted away. Whatever price gap remains belongs to the feature you are testing.
How to use: Use this when a paired sale has more than one difference.
Exam Tip
For paired sales questions, choose the answer that controls for other differences rather than ignoring or arbitrarily scaling them.
Common Mistakes to Avoid
- -Ignoring secondary differences between paired sales
- -Using sales from different markets as a pair
- -Applying arbitrary multipliers instead of supported adjustments
Concept Deep Dive
Analysis
This question tests a requirement for paired sales analysis when the pair is not perfectly matched. If two sales differ in more than one characteristic, the other differences must be adjusted first. Only then can the remaining price difference be attributed to the feature being measured.
Background Knowledge
Paired sales analysis works best when two sales differ in only one feature, so the price difference reflects that feature. When more than one difference exists, the appraiser must adjust for the others first. Each extra adjustment adds uncertainty, so imperfect pairs are less reliable.
Real-World Application
An appraiser measuring a garage contribution finds two sales that also differ in age. Using a supported age adjustment first, the appraiser adjusts one sale for age and then attributes the remaining price difference to the garage, noting the pair is less reliable than a perfect match.
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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