Paired sales from three different feature-matched pairs, sold at different dates, each isolate roughly 0.5% price growth per month. What has been supported?
Correct Answer
A) A market-conditions (time) adjustment rate
Under the stipulated reliable matching and isolated date differences, the three consistent pairs support a market-conditions rate for the relevant market and interval. Check remaining differences, transaction terms and applicability; this is not the final subject value or a universal monthly rate.
Why This Is the Correct Answer
Option A is correct because the pairs are matched on features and differ by sale date, so the consistent 0.5% per month difference isolates the change in market conditions over time. Paired sales are a recognized way to determine adjustment rates. The rate applies to the relevant market and interval, after checking remaining differences and terms.
Why the Other Options Are Wrong
Option B: A location adjustment between neighborhoods
Option B is wrong because the pairs isolate differences in sale date, not location. A location adjustment between neighborhoods would require pairs that differ by location.
Option C: The subject's final value conclusion
Option C is wrong because a market conditions rate is one input to the analysis, not the subject's final value conclusion. Reconciliation of adjusted comparables is still needed.
Option D: An exact effective age for the subject
Option D is wrong because paired sales isolating time say nothing about the subject's effective age, which depends on its condition and remaining life.
What differs is what's measured
In paired sales, the one feature that differs between the pair is the feature being measured.
How to use: Use this to identify which adjustment a paired sales analysis supports.
Exam Tip
Ask which single variable differs between the paired sales; that variable is what the analysis supports.
Common Mistakes to Avoid
- -Treating a time adjustment rate as the final value conclusion
- -Applying a rate from one market or period to a different one without support
- -Confusing a time adjustment with a location adjustment
Concept Deep Dive
Analysis
This question tests what a paired sales analysis isolating date differences supports. When feature-matched pairs differ only by sale date and show consistent price growth of about 0.5% per month, they support a market conditions, or time, adjustment rate. The candidate must recognize what variable was isolated.
Background Knowledge
Paired sales analysis compares sales that are alike except for one feature, so the price difference reflects that feature. When the difference is the sale date, the result indicates market conditions change. Consistency across several pairs strengthens the support.
Real-World Application
An appraiser finds three sets of nearly identical homes that sold at different dates. Each pair shows about 0.5% monthly appreciation, so she applies that rate as a time adjustment to older comparables in the same market.
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