How does a 'market conditions' adjustment differ from a 'conditions of sale' adjustment?
Correct Answer
B) One captures price-level change over time; the other, atypical motivation in a deal
Why this is correct: A 'market conditions' adjustment (or time adjustment) accounts for changes in the overall market price level between the sale date of the comparable and the appraisal's effective date. A 'conditions of sale' adjustment accounts for atypical motivations or relationships in a specific transaction (e.g., a foreclosure, sale between relatives). Why the other choices are wrong: They are not interchangeable names; they address fundamentally different influences. Market conditions adjustments apply in both rising and declining markets. Conditions of sale adjustments apply to any transaction with atypical motivations, not just foreclosures. Exam tip: Market conditions = When? (Time). Conditions of sale = Who/Why? (Parties).
Why This Is the Correct Answer
Why this is correct: A 'market conditions' adjustment (or time adjustment) accounts for changes in the overall market price level between the sale date of the comparable and the appraisal's effective date. A 'conditions of sale' adjustment accounts for atypical motivations or relationships in a specific transaction (e.g., a foreclosure, sale between relatives). Why the other choices are wrong: They are not interchangeable names; they address fundamentally different influences. Market conditions adjustments apply in both rising and declining markets. Conditions of sale adjustments apply to any transaction with atypical motivations, not just foreclosures. Exam tip: Market conditions = When? (Time). Conditions of sale = Who/Why? (Parties).
More sales-comparison-approach Questions
Excess land differs from surplus land in that excess land:
A subject property has a 3-car attached garage. The appraiser locates two valid paired sales: Sale 1 (with 3-car garage) sold for $512,000; Sale 2 (with 2-car garage) sold for $497,600. Both properties are otherwise identical β same age, quality, GLA, lot size, and neighborhood β and sold 5 days apart in a balanced market. The appraiser also confirms via public records and listing photos that no other functional or physical differences exist. What is the indicated contributory value of the *third* garage stall?
The most appropriate unit of comparison is determined by:
An appraiser analyzes three paired sales to isolate the effect of a fireplace. In Pair 1, the property with a fireplace sold for $12,000 more; in Pair 2, $10,500 more; and in Pair 3, $13,500 more. All pairs are highly similar and recent. The appraiser selects $12,000 as the final adjustment. Which principle best supports this selection?
A paired sales analysis yields an adjustment of β$15,000 for a property located on a busy arterial street. Later, the appraiser discovers that all three paired properties with arterial exposure also had 20% smaller lots than their non-arterial counterparts β a difference not initially controlled for. What is the most appropriate action per USPAP?
An appraiser identifies two comparable sales that are identical in all respects except that Sale #1 has a finished basement (1,200 sq ft) and sold for $432,000, while Sale #2 has an unfinished basement of the same size and sold for $408,000. Both sales occurred within three weeks of each other in a stable market. The appraiser intends to apply a per-square-foot adjustment for basement finish to the subject property, which has a 1,000 sq ft finished basement. What is the appropriate paired-sales-derived adjustment amount per square foot for a finished basement?
Three sales support $520,000; the borrower's purchase contract is $505,000. May the appraisal conclude above the contract price?
An appraiser develops a $3,200 adjustment for a fireplace based on a single paired sale. The subject has a fireplace; Comparable A does not. The appraiser applies +$3,200 to Comparable A. Later, the appraiser identifies a second pair showing a $4,600 fireplace contribution. The appraiser replaces the original adjustment with $3,900 β the simple average β and applies it to Comparable A. What is the appropriate USPAP-compliant action regarding the adjustment amount?
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Previous Question
An appraiser uses paired sales analysis to estimate an adjustment for a 3-car garage versus a 2-car garage. Four valid pairs are identified, each controlling for age, condition, and location. The observed price premiums are: $11,200, $13,800, $9,400, and $14,600. The appraiser excludes the $9,400 observation because it involved a property with unusually high custom finishes that likely inflated the garage premium beyond typical market reaction. What is the resulting paired-sales adjustment, rounded to the nearest $100, and which USPAP provision justifies the exclusion?
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