An appraiser is valuing a vacant site near a cemetery. A comparable vacant site without this proximity sold for $492,000. Paired land sales indicate that the proximity stigma lowers value by $74,000, so the subject is inferior to the comparable. No other adjustments apply. What land value is indicated?
Correct Answer
C) $418,000
The comparable is superior to the subject for the stated feature. Apply the market difference downward: $492,000 − $74,000 = $418,000. This result uses the paired-sale evidence given; the feature's mere presence does not create a universal discount.
Why This Is the Correct Answer
Option C is correct because the comparable without cemetery proximity is superior to the subject, so its price is adjusted down by the supported $74,000 discount: $492,000 − $74,000 = $418,000. No other adjustments apply.
Why the Other Options Are Wrong
Option A: $492,000
Option A, $492,000, makes no adjustment at all. The paired-sale evidence supports a $74,000 discount for the subject's inferior location, so the comparable's price must be reduced to $418,000.
Option B: $566,000
Option B, $566,000, adds the discount: $492,000 + $74,000. That treats the superior comparable as inferior; the adjustment goes downward, giving $418,000.
Option D: $344,000
Option D, $344,000, deducts the discount twice: $492,000 − $148,000. The supported difference is $74,000, applied once, for $418,000.
CBS: Comp Better, Subtract
When the comparable is better than the subject, subtract from the comparable. When the comparable is inferior, add.
How to use: Use CBS on any adjustment question to set the sign before doing the arithmetic.
Exam Tip
Decide which property is superior before calculating. Adjust the comparable, not the subject.
Common Mistakes to Avoid
- -Adding the adjustment to a superior comparable
- -Adjusting the subject instead of the comparable
- -Applying the discount twice
Concept Deep Dive
Analysis
This question tests the direction of a sales comparison adjustment. Adjustments are made to the comparable to make it resemble the subject. Because the comparable lacks the cemetery proximity that hurts the subject, the comparable is superior and must be adjusted downward by the supported paired-sale discount.
Background Knowledge
In sales comparison, the comparable's price is adjusted toward the subject. If the comparable is superior in a feature, its price is adjusted downward; if inferior, upward. Paired sales analysis isolates the market's reaction to a single difference.
Real-World Application
An appraiser valuing a lot that borders a cemetery finds paired sales showing lots near the cemetery sold for less than similar lots elsewhere. She reduces the price of a comparable away from the cemetery by that supported amount.
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