How should an appraiser treat a comparable requiring a 45 percent gross adjustment when others need under 10 percent?
Correct Answer
B) Give it little weight or omit it with reason
Why this is correct: The principle of reconciliation states that comparables requiring large net adjustments are less reliable indicators of value for the subject property because each adjustment carries its own potential error. A 45% gross adjustment introduces significant uncertainty, so such a sale should be given little or no weight in the final value conclusion. Why the other choices are wrong: 'Give it equal weight, since it was adjusted' is wrong because large adjustments undermine reliability. 'Give it more weight for widening the range' is incorrect; a wider range doesn't increase reliability. 'Adjust the other sales upward to match it' is faulty logic that would distort the analysis. Exam tip: The size of adjustments is inversely related to the weight a comparable should receive.
Why This Is the Correct Answer
Why this is correct: The principle of reconciliation states that comparables requiring large net adjustments are less reliable indicators of value for the subject property because each adjustment carries its own potential error. A 45% gross adjustment introduces significant uncertainty, so such a sale should be given little or no weight in the final value conclusion. Why the other choices are wrong: 'Give it equal weight, since it was adjusted' is wrong because large adjustments undermine reliability. 'Give it more weight for widening the range' is incorrect; a wider range doesn't increase reliability. 'Adjust the other sales upward to match it' is faulty logic that would distort the analysis. Exam tip: The size of adjustments is inversely related to the weight a comparable should receive.
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