Comparable sales are selected so that some are superior and some are inferior to the subject in key characteristics. What does this bracketing accomplish?
Correct Answer
C) It supports comparison with less extrapolation
Bracketing uses relevant observations on both sides of a subject characteristic or indicated value to limit extrapolation. Unadjusted comparable prices around the contract price do not prove the contract is correct or bound the final adjusted value mechanically.
Why This Is the Correct Answer
Option C is correct because bracketing uses relevant comparables on both sides of a subject characteristic or indicated value, which limits extrapolation. With observations above and below the subject, the appraiser can reason within the range of the data. This supports a more reliable comparison.
Why the Other Options Are Wrong
Option A: It proves the contract price is exactly correct
Option A is wrong because bracketing does not prove the contract price is exactly correct. Unadjusted comparable prices around the contract price do not validate the contract or mechanically bound the final adjusted value.
Option B: It eliminates the need for adjustments
Option B is wrong because bracketing does not eliminate the need for adjustments. Comparables that are superior and inferior still differ from the subject, and those differences must be analyzed and adjusted as supported.
Option D: It ensures the report passes a lender review
Option D is wrong because bracketing is an analytical technique, not a way to ensure the report passes a lender review. Review outcomes depend on the overall credibility and support of the report.
Bookends around the subject
Place comparables like bookends on either side of the subject. The subject sits between them, so you read inside the range instead of guessing past it.
How to use: Use the bookend image to recall that bracketing limits extrapolation.
Exam Tip
Bracketing improves reliability by keeping the analysis within the data range. Be wary of options claiming it proves a price or removes the need for adjustments.
Common Mistakes to Avoid
- -Believing bracketing removes the need for adjustments
- -Using bracketed unadjusted prices to validate the contract price
- -Treating bracketing as a lender-review checkbox
Concept Deep Dive
Analysis
This question tests the purpose of bracketing in the sales comparison approach. Choosing comparables on both sides of the subject's characteristics lets the appraiser interpolate rather than project beyond the data. It does not remove the need for adjustments or prove any particular price.
Background Knowledge
In the sales comparison approach, bracketing means selecting comparables that are both superior and inferior to the subject in key characteristics. This lets the appraiser interpolate within the data range, which is generally more reliable than extrapolating beyond it.
Real-World Application
An appraiser valuing a 2,000-square-foot home selects comparables of 1,800 and 2,200 square feet. Because the subject falls within that range, the appraiser can support the size adjustment from the data rather than projecting beyond it.
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