Paired sales analysis is used to:
Correct Answer
B) Estimate a feature’s contribution with other material influences controlled
Controlled paired comparisons can estimate a property difference’s market contribution. Verify relevant influences are controlled before attributing a price gap to the feature. This does not make paired analysis the universally best method or imply market comparisons can never inform depreciation or income analysis.
Why This Is the Correct Answer
Option B is correct because paired sales analysis estimates a feature's market contribution by comparing nearly identical properties while other material price influences are controlled. In theory it can estimate the adjustment for any element of comparison when sufficient data are available.
Why the Other Options Are Wrong
Option A: Prove a price gap belongs to one feature without checking other differences
Option A says paired sales prove a price gap belongs to one feature without checking other differences. Failing to control other differences means the gap could reflect other factors, so the method requires verifying those influences first.
Option C: Replace the highest and best use analysis for the subject
Option C claims paired sales replace highest and best use analysis. Paired sales is an adjustment technique; it does not substitute for analyzing the legal, physical, financial and maximally productive use of the subject.
Option D: Establish a national adjustment that applies to similar properties
Option D says paired sales establish a national adjustment for similar properties. Paired sales measure how a particular market reacts to a difference, and results depend on local data rather than producing a nationwide figure.
Twins differing in one trait
Think of a paired sale as two near-twin properties that differ in one trait; the price gap estimates that trait's value only if everything else matches or is controlled.
How to use: Use it to test whether a described comparison truly isolates one feature.
Exam Tip
Answers claiming paired sales prove something without checking other differences, or give universal results, are typically wrong.
Common Mistakes to Avoid
- -Attributing a price gap to one feature without controlling other differences
- -Treating paired sales results as universal across markets
- -Relying on a single pair without considering data sufficiency
Concept Deep Dive
Analysis
This question tests the purpose of paired sales analysis. It compares nearly identical properties that differ mainly in one characteristic to estimate that characteristic's effect on value. The key condition is that other material price influences are controlled before a price gap is attributed to the feature.
Background Knowledge
Paired sales, or paired data analysis, is a quantitative technique in which nearly identical properties are compared to isolate the effect of one characteristic. It is one of several methods for supporting adjustments, along with statistical analysis and modeling. Its reliability depends on how well other differences are controlled and on having enough data.
Real-World Application
An appraiser finds two recent sales of similar homes on the same street, one with a pool and one without, with matching size and condition. After confirming no other material differences, the appraiser uses the price gap as evidence for a pool adjustment.
More Sales Comparison Questions
Which stated cause of supported value loss is external?
Improvement cost new is $450,000. Separately supported improvement depreciation deductions of $45,000, $25,000, $15,000 are expressly nonoverlapping and not already excluded from cost new. Add supported site value of $125,000, already reflecting any site losses. What total indicated value results?
Which two depreciation categories may each be classified as curable or incurable by comparing the cost to remedy a deficiency with the value gained?
Improvement cost new is $800,000. Separately supported improvement depreciation deductions of $120,000, $80,000, $40,000 are expressly nonoverlapping and not already excluded from cost new. No site is included. What depreciated improvement amount results?
The principle of anticipation in real estate valuation states that:
Which highest-and-best-use criterion addresses whether a proposed use is allowed by zoning and applicable legal restrictions?
Three comparables produce adjusted indications of $312,000, $309,000 and $315,000, requiring gross adjustments of 9%, 14% and 22% respectively. Verification also establishes that the first sale is the closest competitive substitute and its adjustments are better supported than the other two. Which indication deserves the most weight on those facts?
When reconciling value indications from the three approaches to value, an appraiser should:
A property sold at a cash-equivalent price of $1,062,500. Its stabilized annual NOI is $85,000. What is the indicated overall rate?
In reconciliation, an appraiser should:
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