Four sales are rated overall against a 2,000-square-foot colonial being appraised. Sale 1 sold for $455,000 and is inferior. Sale 2 sold for $459,000 and is superior, but verification shows it was a sale between family members at a price below market. Sale 3 sold for $468,000 and Sale 4 for $481,000; both are superior. Which price sets the upper limit of the subject's value?
Correct Answer
C) $468,000
A superior sale caps the subject's value, and the lowest-priced valid superior sale is the tightest cap. Sale 2 is lower but was a family sale below market, so it does not reflect market value and cannot serve as a limit; that leaves Sale 3 at $468,000. $455,000 is the inferior sale and sets the lower limit, and $481,000 is a superior sale but not the lowest one.
Why This Is the Correct Answer
Option C is correct because, once the family sale is excluded, the superior sales are $468,000 and $481,000, and the subject, being worse than both, must be worth less than the lower of them. Sale 3 at $468,000 therefore sets the upper limit.
Why the Other Options Are Wrong
Option A: $455,000
Option A, $455,000, is the price of Sale 1, which is inferior. An inferior sale shows the subject is worth more than its price, so $455,000 is the lower limit, not the upper one.
Option B: $459,000
Option B, $459,000, comes from Sale 2, the family sale below market. A sale that does not meet market value conditions should not be used as a comparable, so it cannot set the ceiling.
Option D: $481,000
Option D, $481,000, is a superior sale but not the lowest valid one. The subject is also worse than Sale 3 at $468,000, so a cap at $481,000 is too loose.
Lowest valid superior caps
Screen out non-market sales first, then the cheapest remaining superior sale is the ceiling.
How to use: Use it when a question asks for the upper limit of value from a ranked set.
Exam Tip
Read every verification note before working the array. A sale flagged as related-party or below market usually changes which sale sets a limit.
Common Mistakes to Avoid
- -Using a related-party sale as a bracket limit
- -Taking the highest superior sale as the upper limit
- -Confusing the lower limit with the upper limit
Concept Deep Dive
Analysis
The question tests two steps: screening sales for market value conditions and then finding the ceiling in the ranked array. The ceiling is the lowest-priced superior sale, but only among sales that reflect market value. A non-market sale can distort the bracket if it is left in.
Background Knowledge
In relative comparison analysis, superior sales indicate that the subject's value is below their prices, so the lowest of them sets the upper limit. Every sale in the array must first qualify as a market transaction.
Real-World Application
An appraiser finds a low sale of a superior home and learns from the agent that it went to the seller's son. The appraiser excludes it from the array and reports the next superior sale as the ceiling.
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?
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