Use a supported simple additive market trend of+0.80% per month, without compounding. A comparable contracted seven months before the effective date for a cash-equivalent $415,000; no other adjustments apply. What adjusted price results?
Correct Answer
D) $438,240
Adjusted price=$415,000×(1+0.008×7)=$438,240. This is the numerical result under the stated definitions, not an automatic market-condition or property-value conclusion. Common errors: applying only one month of the trend gives $418,320; adjusting downward instead of upward gives $391,760; reporting only the adjustment amount gives $23,240.
Why This Is the Correct Answer
Option D is correct because $415,000 x (1 + 0.008 x 7) = $415,000 x 1.056 = $438,240. The market rose after the sale, so the comparable is adjusted upward to the effective date.
Why the Other Options Are Wrong
Option A: $23,240
Option A, $23,240, is only the adjustment amount: $415,000 x 0.008 x 7 = $23,240. The question asks for the adjusted price, which is $415,000 + $23,240 = $438,240.
Option B: $391,760
Option B, $391,760, comes from adjusting downward instead of upward: $415,000 x (1 - 0.008 x 7) = $391,760. With a rising market the adjustment is added, giving $438,240.
Option C: $418,320
Option C, $418,320, applies only one month of the trend: $415,000 x 1.008 = $418,320. The sale is seven months old, so the correct figure is $415,000 x 1.056 = $438,240.
Rising market, raise the comp
If prices rose since the sale, add the adjustment to bring the comparable up to today.
How to use: Use this to check the direction of a time adjustment before calculating.
Exam Tip
Confirm whether the question asks for the adjustment amount or the adjusted price, and count the months carefully.
Common Mistakes to Avoid
- -Reporting the adjustment amount instead of the adjusted price
- -Adjusting in the wrong direction
- -Applying only one month of a monthly trend
Concept Deep Dive
Analysis
This question tests applying a stated simple monthly trend to a comparable. With +0.80% per month for seven months, the total upward adjustment is 5.6%. Multiply the sale price by 1.056 to get the adjusted price.
Background Knowledge
Market-conditions adjustments bring older comparable sales to the effective date. In a rising market, older sales are adjusted upward; in a declining market, downward. The rate and its application must be supported by market evidence.
Real-World Application
An appraiser has supported a 0.8% monthly increase from paired sales. A comparable closed seven months before the effective date at $415,000. The appraiser adds a $23,240 market-conditions adjustment for an adjusted price of $438,240.
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Previous Question
Two sales matched in features and terms sold for $400,000 exactly eight months before the effective date and $424,000 at the effective date. Market prices are changing at a constant simple monthly rate, without compounding. What is the monthly rate, and what is the adjusted price of a matched third comparable that contracted six months before the effective date at $450,000?
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