Matched pair analysis is most reliable when the two sales:
Correct Answer
D) Are verified and alike in every relevant way except the isolated feature
A strong pair controls relevant price influences other than the feature being measured, including rights, terms, timing, location and condition. Close dates alone do not remove a changing market’s effect, and identical financing alone does not control other differences.
Why This Is the Correct Answer
Option D is correct because a matched pair is most reliable when both sales are verified and alike in every relevant way except the feature being measured. Paired sales analysis uses nearly identical properties to determine a single characteristic's effect on value. Controlling rights, terms, timing, location and condition allows the price difference to be attributed to the isolated feature.
Why the Other Options Are Wrong
Option A: Have matching financing terms but other differences left unexamined
Option A is wrong because matching financing terms while leaving other differences unexamined does not isolate the feature. Any uncontrolled difference in location, condition or timing could explain part of the price gap.
Option B: Involve different property types, with no control for any of the differences
Option B is wrong because sales of different property types with no control for any differences cannot isolate a single feature. Paired sales analysis relies on nearly identical properties.
Option C: Occur close together in time, regardless of all other differences
Option C is wrong because closeness in time does not make a pair reliable regardless of all other differences. Close dates alone do not remove a changing market's effect, and other differences would still distort the result.
Twins with one difference
A good matched pair is like twins who differ in only one way. If they differ in more ways, you cannot tell which difference caused the price gap.
How to use: Use the twins image when judging whether a pair of sales can isolate a feature's contribution.
Exam Tip
Pick the answer that controls all relevant differences except the one being measured. Options that control just one factor, such as timing or financing, are incomplete.
Common Mistakes to Avoid
- -Using a pair that differs in several features
- -Assuming close sale dates control all other differences
- -Skipping verification of the sales in the pair
Concept Deep Dive
Analysis
This question tests the conditions that make a matched pair (paired sales) analysis reliable. The method isolates one feature's effect on price, so the two sales must be alike in every other relevant respect. Answers that control only one influence while leaving others unexamined fail the test.
Background Knowledge
Paired sales, or paired data analysis, compares two sales that are nearly identical except for one characteristic, attributing the price difference to that characteristic. The method depends on careful verification and on controlling other price influences such as property rights, financing, conditions of sale, market conditions, location and physical features.
Real-World Application
An appraiser wants to measure the market's reaction to a two-car garage. They find two verified sales on the same street, sold a few weeks apart, with similar size, age and condition, one with a garage and one without, and use the price difference as support.
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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Previous Question
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?
Next Question
Comparable 3, a split-level home, sold for $360,000 four months before the effective date. The executor of the owner's estate accepted the first offer after two weeks of limited marketing. Paired sales show that homes sold this way at that time brought about 10% less than fully marketed sales of similar homes. Prices have been stable since the contract date. The deceased owner had bought the home for $210,000. What is the comparable's price after the conditions-of-sale adjustment?