A comparable has 45% gross adjustments while others have under 10%. What follows from those percentages alone?
Correct Answer
D) Check comparability and support; percentages alone do not decide.
A 45% gross total warrants reviewing comparability and adjustment support, but does not alone prove weakness or prescribe low weight. Fannie Mae specifically disallows using amount/count as the sole acceptability criterion. Verify the underlying evidence before deciding reliance.
Why This Is the Correct Answer
Option D is correct because a 45% gross total warrants reviewing comparability and adjustment support but does not by itself prove the sale is weak. Fannie Mae has no specific net or gross adjustment limits, and the number or amount of adjustments must not be the sole determinant of a comparable's acceptability. The appraiser verifies the underlying evidence before deciding how much to rely on the sale.
Why the Other Options Are Wrong
Option A: Ignore the gross totals, because the net adjustment is what matters.
Option A says to ignore the gross totals because only the net adjustment matters. Gross adjustments show how different the comparable is overall, so a 45% gross total is a reason to review the sale, not something to ignore.
Option B: Give the comparables equal weight, since each was adjusted.
Option B says to give the comparables equal weight because each was adjusted. Weight should reflect comparability and the support for the adjustments, not merely the fact that adjustments were made.
Option C: Declare it the most informative sale, since it was adjusted the most.
Option C says the sale with the most adjustments is the most informative. Heavy adjustment usually means the sale differs more from the subject, which calls for closer review rather than more reliance.
Big numbers prompt questions
A large gross percentage raises questions to investigate; it does not answer them.
How to use: Use this when a question focuses on adjustment percentages alone.
Exam Tip
Prefer answers that call for reviewing comparability and support over answers that accept or reject a sale based on percentages alone.
Common Mistakes to Avoid
- -Rejecting a comparable based only on gross percentage
- -Ignoring gross adjustments because net looks small
- -Treating the most-adjusted sale as the best indicator
Concept Deep Dive
Analysis
This question tests how to interpret large gross adjustment percentages. A high gross total is a signal to look more closely, not a verdict. Reason through what the percentages alone can and cannot tell you about a comparable.
Background Knowledge
Gross adjustments sum the absolute value of all adjustments; net adjustments sum them with signs. Large gross adjustments suggest a comparable differs substantially from the subject. Fannie Mae does not set numerical limits and instead expects the appraiser to judge comparability and support.
Real-World Application
In a rural market, one comparable needs 45% gross adjustments for size and acreage while two others need under 10%. The appraiser checks the support for the large adjustments and explains in reconciliation how much weight each sale receives and why.
More Sales Comparison Questions
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Which two depreciation categories may each be classified as curable or incurable by comparing the cost to remedy a deficiency with the value gained?
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Which highest-and-best-use criterion addresses whether a proposed use is allowed by zoning and applicable legal restrictions?
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