On a URAR form, if an appraiser makes a $5,000 adjustment for a bathroom count difference between the subject and a comparable, this adjustment should be:
Correct Answer
B) Subtracted from the comparable's sale price if the subject is superior
When the subject property is superior to the comparable (more bathrooms), the adjustment amount is subtracted from the comparable's sale price to make it more equivalent to the subject. This follows the principle that adjustments are always made to the comparable, not the subject.
Why This Is the Correct Answer
Option B is correct because when the subject property is superior to the comparable (has more bathrooms), the adjustment amount must be subtracted from the comparable's sale price. This follows the principle that we adjust the comparable to make it equivalent to the subject property. Since the comparable is inferior (fewer bathrooms), we reduce its sale price by the adjustment amount to reflect this deficiency. The adjustment grid on the URAR always shows adjustments TO the comparables, and a subtraction indicates the comparable is inferior in that feature.
Why the Other Options Are Wrong
Option A: Added to the comparable's sale price if the subject is superior
Option A is incorrect because it suggests adding to the comparable's sale price when the subject is superior. This would incorrectly increase the comparable's adjusted value when it should be decreased to reflect its inferior bathroom count. Adding the adjustment would make the inferior comparable appear more valuable than it actually is relative to the subject.
Option C: Applied as a percentage rather than dollar amount
Option C is incorrect because bathroom adjustments are typically made as dollar amounts rather than percentages. Bathrooms represent discrete, countable features with relatively standardized market value impacts that are best expressed in dollar terms. Percentage adjustments are more commonly used for overall condition or market conditions adjustments.
Option D: Averaged with other bathroom adjustments in the grid
Option D is incorrect because individual adjustments should reflect the specific difference between each comparable and the subject property. Averaging bathroom adjustments across the grid would eliminate the specific analysis required for each comparable and could result in inappropriate adjustments that don't reflect actual market differences.
SUBTRACT for Superior Subject
Remember 'S.S.' - when the Subject is Superior, you SUBTRACT from the comparable. Think 'Superior Subject = Subtract' - if your house is better, you subtract from the comparable's price to bring it down to reflect its inferiority.
How to use: When you see an adjustment question, first identify which property (subject or comparable) is superior in the feature being adjusted. If the subject is superior, remember 'S.S.' and subtract the adjustment from the comparable's sale price.
Exam Tip
Always identify the direction of adjustment by asking 'Which property is better?' If the subject is better, subtract from the comparable. If the comparable is better, add to the comparable. Never adjust the subject property.
Common Mistakes to Avoid
- -Adding the adjustment when the subject is superior instead of subtracting
- -Trying to adjust the subject property instead of the comparable
- -Confusing the direction of adjustment based on which property has the superior feature
Concept Deep Dive
Analysis
This question tests understanding of the fundamental adjustment principle in the sales comparison approach on the URAR (Uniform Residential Appraisal Report) form. The core concept is that adjustments are always made TO the comparable properties, never to the subject property, to make the comparables more similar to the subject. When the subject property has a superior feature (more bathrooms), the comparable's value must be adjusted upward by subtracting a negative adjustment or adding a positive adjustment. However, the mathematical operation depends on how the adjustment is conceptualized - if the $5,000 represents the value difference, it's subtracted from the comparable's sale price to reflect that the comparable is inferior.
Background Knowledge
The sales comparison approach requires adjusting comparable properties to make them equivalent to the subject property. All adjustments are made TO the comparables, never to the subject, and the direction of adjustment depends on whether the comparable is superior or inferior to the subject in each feature.
Real-World Application
In practice, if you're appraising a 3-bathroom home and your comparable sold for $300,000 but only has 2 bathrooms, you would subtract the bathroom adjustment (say $5,000) from the comparable's sale price, resulting in an adjusted value of $295,000 for comparison purposes.
More Report Writing Questions
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What is the minimum transaction threshold for requiring a state licensed or certified appraiser under Title XI for most federally related transactions?
The Dodd-Frank Act established which requirement specifically related to appraisal independence?
Which of the following is NOT a responsibility of the Appraisal Subcommittee (ASC)?
State appraiser regulatory agencies are primarily responsible for which of the following functions?
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