Market prices for townhouses in a planned development have been stable for the past year. The subject is a 1,400-sf end unit with a two-car garage. The appraiser rates four recent sales against it overall: Sale 1, $270,000, inferior; Sale 2, $301,000, similar; Sale 3, $305,000, similar; Sale 4, $322,000, superior. Sales 2 and 3 are end units that also have two-car garages, closed within the past six weeks and were each confirmed with the selling agent, and the appraiser finds no basis to rate either one closer to the subject than the other. Which value is most reasonable?
Correct Answer
C) $303,000
The two sales rated similar overall are the best indicators, and because they are equally recent, equally verified and equally comparable, they deserve equal weight, which places the value at about $303,000. The inferior and superior sales set the outer limits but are less comparable, so averaging all four ($299,500) or taking the midpoint of the inferior and superior sales ($296,000) gives weight to the wrong sales. Relying on Sale 3 alone ($305,000) favors one sale without a reason. The shared two-car garage is not a difference and does not change the analysis.
Why This Is the Correct Answer
Option C is correct because Sales 2 and 3 are the only sales rated similar overall, and nothing makes either more comparable or more reliable than the other. Giving them equal weight gives ($301,000 + $305,000) / 2 = $303,000.
Why the Other Options Are Wrong
Option A: $296,000
Option A, $296,000, is the midpoint of the inferior Sale 1 and the superior Sale 4: ($270,000 + $322,000) / 2. Those sales only set the outer limits and are less comparable than the two similar sales.
Option B: $299,500
Option B, $299,500, is the simple average of all four sales: $1,198,000 / 4. It gives the inferior and superior sales the same weight as the two similar sales, which are closer in comparability.
Option D: $305,000
Option D, $305,000, relies on Sale 3 alone. Sale 3 is no more comparable or better verified than Sale 2 at $301,000, so there is no reason to set the value at its price.
Weight follows comparability
Give each sale a vote in proportion to how close it is to the subject; twins get equal votes, distant cousins get less.
How to use: Use this when deciding how much weight each rated sale should carry.
Exam Tip
Look first at which sales are rated similar and whether anything sets one above the other; outer sales define limits, not the point.
Common Mistakes to Avoid
- -Averaging all sales without regard to comparability
- -Using the midpoint of the outer sales
- -Favoring one equally comparable sale without a reason
Concept Deep Dive
Analysis
The question tests weighting in relative comparison. The greatest weight goes to the sales closest in comparability; when two sales are equally close and equally reliable, weighting them equally is the reasoned result.
Background Knowledge
In relative comparison analysis, sales are rated superior, similar or inferior overall, and the conclusion leans on the sales rated similar. Weight follows comparability and reliability: when the best sales are equal on both, equal weight is reasoned judgment, not a mechanical average of all the sales.
Real-World Application
An appraiser has two equally comparable sales of the same condominium plan, one floor apart, at $301,000 and $305,000. With no reason to favor either, the appraiser concludes about $303,000 and explains the equal weighting.
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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