In a URAR form, if the subject property has a pool but none of the comparables do, the appraiser should:
Correct Answer
C) Make a positive adjustment to each comparable
Why this is correct: In sales comparison, adjustments are made to the comparable properties to make them equivalent to the subject. If the subject has a superior feature (a pool), a positive adjustment is made to each comparable's sale price to account for its inferiority. Why the other choices are wrong: 'Make a negative adjustment to the subject' is backwards; you adjust comparables to the subject. 'Make no adjustment as pools don't affect value' is incorrect; pools typically add value. 'Find new comparables that have pools' is not always feasible or necessary; adjustments are standard practice. Exam tip: Adjust the comparable, not the subject. Subject is the standard; comparables are adjusted to match.
Why This Is the Correct Answer
Option B is correct because adjustments in the sales comparison approach are always made to the comparable properties, not the subject. Since the subject has a pool and the comparables don't, the comparables are inferior in this aspect. To make them equivalent to the subject for comparison purposes, we add the contributory value of a pool to each comparable's sale price. This positive adjustment accounts for the fact that if these comparables had pools like the subject, they would have sold for more money.
Why the Other Options Are Wrong
CATS Rule
Comparables Are The Subject - remember that we adjust comparables TO make them like the subject. If subject is Superior, add to comparables (+). If subject is inferior, subtract from comparables (-).
How to use: When you see adjustment questions, immediately identify: 1) What has the feature (subject or comparable)? 2) Apply CATS - adjust the comparable in the direction that makes it more like the subject. Subject has pool, comparables don't = add to comparables.
Exam Tip
Always remember the adjustment direction: adjustments go TO the comparables, and the direction depends on whether the comparable is superior (+) or inferior (-) to the subject in that feature.
Common Mistakes to Avoid
- -Adjusting the subject instead of the comparables
- -Making negative adjustments to comparables when the subject has superior features
- -Assuming amenities like pools have no contributory value without market research
Concept Deep Dive
Analysis
This question tests the fundamental principle of comparative market analysis adjustments in the sales comparison approach. The key concept is that adjustments are always made TO the comparables, never to the subject property, because the goal is to determine what each comparable would have sold for if it were identical to the subject. When the subject has a superior feature (like a pool) that the comparables lack, we must add value to the comparables to account for their inferiority. This process helps establish what buyers would pay for the subject property based on adjusted comparable sales data.
Background Knowledge
The sales comparison approach requires appraisers to adjust comparable sales to account for differences with the subject property. All adjustments are made TO the comparables, never to the subject, with the goal of determining what each comparable would have sold for if it were identical to the subject property.
Real-World Application
In practice, appraisers research market data to determine contributory values for features like pools, then apply these adjustments consistently. For example, if market analysis shows pools contribute $15,000 to value, this amount would be added to each comparable without a pool when comparing to a subject with a pool.
More Sales Comparison Questions
An appraiser is analyzing three comparable sales with the following data: Sale 1: $350,000 with +$10,000 adjustments; Sale 2: $340,000 with -$5,000 adjustments; Sale 3: $360,000 with -$15,000 adjustments. What are the adjusted sale prices?
A lender orders an appraisal for a $300,000 residential loan. After receiving the appraisal, the loan officer contacts the appraiser requesting that certain language be changed to better support the loan approval. This scenario represents a violation of:
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