A comparable-sale grid includes a $5,000 bathroom adjustment. Which treatment best supports clear appraisal reporting?
Correct Answer
D) Explain the adjustment enough for users and keep its support on file
A grid amount alone does not establish a credible adjustment. Develop appropriate support, explain the rationale sufficiently under applicable reporting requirements and retain necessary supporting material in the workfile. The report need not reproduce every raw supporting document, but a conventional amount without assignment-specific justification is inadequate. Cost and market contribution need not be identical.
Why This Is the Correct Answer
Option D is correct because the report must contain sufficient information for intended users to understand it, and the workfile must hold the data necessary to support the appraiser's opinions. Explaining the $5,000 adjustment enough for users and keeping its support on file meets both duties.
Why the Other Options Are Wrong
Option A: Assume a bathroom contributes $5,000 in each market
Option A is wrong because assuming a bathroom contributes $5,000 in each market ignores local evidence. Contributory value varies by market and must be supported for the assignment.
Option B: Keep no supporting evidence on file, since the adjustment amount is small
Option B is wrong because a small adjustment amount does not excuse keeping no supporting evidence on file. The workfile must contain what is necessary to support the opinions, regardless of size.
Option C: Show the number in the grid without stating any reasoning
Option C is wrong because showing the $5,000 number in the grid without any reasoning leaves users unable to understand how it was derived.
Explain it, file it
Each adjustment needs two homes: a clear explanation in the report and its support in the workfile.
How to use: Use this when a question asks how to handle a grid adjustment.
Exam Tip
The best answer pairs report explanation with workfile support; rule-of-thumb amounts without market support are weak choices.
Common Mistakes to Avoid
- -Using the same adjustment in all markets
- -Skipping support for small adjustments
- -Assuming cost equals contributory value
Concept Deep Dive
Analysis
This question tests the link between reporting clarity and workfile support. A grid figure such as a 5,000 dollar bathroom adjustment needs an explanation users can follow and supporting material retained in the workfile.
Background Knowledge
Adjustments can be supported by paired sales, regression, cost data or other market-based methods. The report summarizes the reasoning, while detailed support can stay in the workfile.
Real-World Application
An appraiser adjusts comparables 5,000 dollars per bathroom based on two paired sales in the neighborhood. The report briefly explains the paired-sales basis, and the workfile holds the sale details.
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