In comparable selection, which property would be the BEST comparable for a 2,200 sq ft ranch home built in 1985?
Correct Answer
A) 2,400 sq ft ranch built in 1983, sold 2 months ago, same neighborhood
While not perfect, option A provides the best combination of similar style (ranch), similar age (1983 vs 1985), same location, and recent sale date. The size difference is manageable with adjustments.
Why This Is the Correct Answer
Option A provides the best overall combination of comparable factors despite the size difference. The ranch style matches exactly, eliminating the need for style adjustments which can be subjective and significant. The 2-year age difference (1983 vs 1985) is minimal and easily adjusted. The same neighborhood location ensures similar market conditions, and the 2-month sale date provides current market data. The 200 sq ft size difference, while notable, is the most straightforward adjustment to make using cost per square foot calculations.
Why the Other Options Are Wrong
Option B: 2,200 sq ft two-story built in 1985, sold 1 month ago, same neighborhood
The two-story versus ranch style difference is a major architectural distinction that requires significant adjustment. Style differences affect buyer preferences, functionality, and market appeal in ways that are difficult to quantify accurately. Even though the size and age match perfectly, the style difference outweighs these advantages.
Option C: 2,200 sq ft ranch built in 1985, sold 4 months ago, adjacent neighborhood
The 4-month sale date makes this data less current than option A, and the adjacent neighborhood location introduces potential market variation. While the size and age match perfectly, location differences can be substantial and difficult to adjust for accurately, especially when combined with the older sale date.
Option D: 2,100 sq ft ranch built in 1987, sold 6 months ago, same neighborhood
The 6-month sale date is significantly older, making the data less reliable for current market conditions. Additionally, the smaller size (2,100 sq ft) creates a larger percentage difference in size compared to option A. The combination of older sale data and greater size variance makes this less reliable than option A.
SLATS Priority System
Style, Location, Age, Time, Size - prioritize comparables that match these factors in order of difficulty to adjust. Style and Location are hardest to adjust accurately, while Size and Time are most straightforward to adjust.
How to use: When comparing multiple potential comparables, rank each one by how many SLATS factors match exactly, giving extra weight to Style and Location matches. Choose the comparable with the best overall SLATS score, prioritizing the harder-to-adjust factors.
Exam Tip
Don't automatically choose the comparable with the most matching features - focus on which differences are easiest to adjust reliably. Size and time adjustments are mathematical, while style and location adjustments are more subjective.
Common Mistakes to Avoid
- -Choosing comparables based solely on matching square footage while ignoring style differences
- -Prioritizing older sales with better physical matches over recent sales with minor differences
- -Failing to consider the cumulative effect of multiple adjustments when one comparable needs many small adjustments versus another needing one larger adjustment
Concept Deep Dive
Analysis
Comparable selection in real estate appraisal requires balancing multiple factors to find the most similar properties to the subject. The key factors include architectural style, age/construction date, size, location, and sale recency. When no perfect match exists, appraisers must prioritize which similarities are most important and which differences can be reasonably adjusted. The goal is to minimize the number and magnitude of adjustments needed while maintaining reliability of the comparison.
Background Knowledge
Comparable selection follows the principle of substitution - buyers will pay similar amounts for similar properties. Appraisers must balance multiple factors including location, size, age, style, condition, and sale date. When perfect matches don't exist, the goal is to select comparables requiring the fewest and most reliable adjustments.
Real-World Application
In practice, appraisers often face this exact situation where no perfect comparable exists. They must document their selection rationale and adjustment methodology. A 200 sq ft difference with good style/location match is preferable to perfect size with style differences that could vary by thousands of dollars.
More Market Analysis Questions
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When analyzing highest and best use, which of the following would make a use financially infeasible?
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