How should line-item adjustments in a sales comparison grid be developed?
Correct Answer
A) Use consistent supported reasoning, with amounts responsive to relevant market differences
Apply consistent reasoning and supported bases, not necessarily identical dollar rates across dissimilar segments or amounts. Varying amounts can be appropriate when relevant evidence supports it; manipulating them merely to converge on a target is not. There is no universal five-percent threshold.
Why This Is the Correct Answer
Option A is correct because adjustments should rest on consistent, supported reasoning, with amounts that reflect relevant market differences. The same method and basis are applied throughout, but the amounts may vary where the evidence shows the market reacts differently, such as across different price segments.
Why the Other Options Are Wrong
Option B: Use identical dollar amounts for each comparable in the grid, set by a standard schedule
Option B uses identical dollar amounts for each comparable set by a standard schedule. A fixed schedule does not reflect the market evidence, and the market reaction to a feature can differ across dissimilar segments.
Option C: Vary the amounts as needed to bring the indications closer together
Option C varies amounts to bring the indications closer together. Adjusting merely to make results converge is manipulation rather than market-based analysis.
Option D: Ignore any difference smaller than five percent of price
Option D ignores any difference smaller than five percent of price. There is no universal five-percent threshold; whether a difference warrants adjustment depends on whether the market reacts to it.
Same logic, market amounts
Keep the reasoning consistent and let the market set the amounts. Do not let the desired answer set them.
How to use: Use this when choosing between a fixed-schedule answer and an evidence-based answer.
Exam Tip
Be cautious with choices that offer fixed schedules, convenient thresholds or adjustments aimed at making results agree; supported, consistent reasoning is the standard.
Common Mistakes to Avoid
- -Using a canned adjustment schedule without market support
- -Tweaking adjustments to narrow the range of indications
- -Skipping small differences based on an arbitrary percentage cutoff
Concept Deep Dive
Analysis
This question tests how adjustments should be developed in a sales grid. The key is consistency in reasoning and support, with amounts that respond to real market differences. Consistency does not mean identical dollar amounts everywhere, and changing amounts just to make indications agree is improper.
Background Knowledge
Credible sales comparison analysis applies the same reasoning to each comparable and supports each adjustment with market evidence. Differences in adjustment amounts can be valid when the market reaction differs. Adjustments made to reach a target value undermine credibility.
Real-World Application
An appraiser finds that a garage adds less in the lower-priced segment than in the higher-priced one. Using the same paired-sales method, the appraiser applies different supported garage adjustments to comparables in each segment and explains why.
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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