In a commercial-residential mixed-use neighborhood, an appraiser adjusts a comparable for corner location using a $16,000 dollar adjustment derived from detached single-family sales. The subject is a duplex on a corner lot. The appraiser notes in the report: 'Corner premium is assumed consistent across housing types due to shared street exposure.' Under USPAP, what is the primary deficiency in this reasoning?
Correct Answer
B) Applying a single-family corner premium to a duplex is unsupported
Shared street exposure alone does not establish that single-family buyers and duplex buyers pay the same corner premium. Investigate transferability and relevant market evidence for the subject’s competitive use and characteristics. Source data from another type are not categorically forbidden if a supported analysis establishes applicability. No fixed 12% net limit or two-firm approval rule is imposed by USPAP.
Why This Is the Correct Answer
Option B is correct because applying a $16,000 corner premium from detached single-family sales to a duplex is unsupported when the only rationale is shared street exposure. Adjustments must reflect the reaction of the market participants who would buy the subject, and duplex buyers may weigh a corner differently. Data from another property type are not forbidden, but the appraiser must establish that the premium transfers to the subject's market.
Why the Other Options Are Wrong
Option A: The grid failed to apply a 12% net-adjustment cap to the comparable
Option A is wrong because USPAP does not impose a 12% net-adjustment cap on comparables. The deficiency is the unsupported transfer of the premium, not a missing percentage limit.
Option C: Corner adjustments must be stated as a percentage of land value
Option C is wrong because there is no requirement that corner adjustments be stated as a percentage of land value. Adjustments may be expressed in dollars or percentages as the market evidence supports.
Option D: Two appraisal firms must approve any corner location adjustment
Option D is wrong because no rule requires two appraisal firms to approve a corner location adjustment. Support for an adjustment comes from market evidence, not outside approval.
Same street, different buyers
A shared street does not mean shared buyers. Ask who buys the subject and whether they pay the same premium.
How to use: Use this phrase when an adjustment is borrowed from a different property type or market segment.
Exam Tip
Watch for options that invent fixed percentage caps or approval rules; USPAP centers on credible, supported analysis.
Common Mistakes to Avoid
- -Assuming an amenity has the same value across property types
- -Believing USPAP sets a fixed net-adjustment percentage limit
- -Thinking data from another property type can be used without testing applicability
Concept Deep Dive
Analysis
This question tests whether an adjustment derived from one property type can be applied to a different type without support. Adjustments must reflect the market's reaction to the difference, and duplex buyers may react to a corner location differently from single-family buyers. Assuming the premium transfers because of shared street exposure skips the needed market analysis.
Background Knowledge
Market-based adjustments measure how buyers of the subject property type react to a difference. Different property types can attract different buyers, such as owner-occupants versus investors, so an amenity's contribution may vary. Borrowing an adjustment from another segment requires evidence that it applies.
Real-World Application
An appraiser valuing a corner duplex finds plenty of single-family corner sales but few duplex sales. She studies duplex and small rental sales to see whether investors pay a corner premium before applying any adjustment, and explains her support in the report.
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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The two-story home being appraised has 1,750 square feet of above-grade gross living area and a 400-square-foot finished basement. A simple linear regression of 41 recent sales of competing two-story homes, ranging from 1,300 to 2,300 square feet of above-grade GLA, gives: sale price = $48,500 + $132 × above-grade GLA. None of the 41 sales has a finished basement. The sales averaged $165 per square foot of above-grade GLA. What sale price does the model predict for the subject before any adjustment for the basement?