A comparable vacant site sold for $295,000, cash equivalent. The net adjustment to this sale is +$30,000 because the subject is superior overall. What is the indicated value of the subject site?
Correct Answer
D) $325,000
Adjusted comparable = $295,000 + $30,000 = $325,000. The indicated result is $325,000. Common errors: subtracting the net adjustment instead of adding it gives $265,000; not applying the net adjustment gives $295,000; reporting only the net adjustment gives $30,000.
Why This Is the Correct Answer
Option D is correct because the subject is superior, so the comparable's price is adjusted upward: $295,000 + $30,000 = $325,000. Adjustments are made to the comparable to indicate what it would sell for if it had the subject's characteristics.
Why the Other Options Are Wrong
Option A: $30,000
Option A, $30,000, reports only the net adjustment, not the adjusted price. The adjustment must be applied to the sale price: $295,000 + $30,000 = $325,000.
Option B: $265,000
Option B, $265,000, subtracts the net adjustment instead of adding it ($295,000 − $30,000). A superior subject requires an upward adjustment, giving $325,000.
Option C: $295,000
Option C, $295,000, is the comparable's unadjusted price. It ignores the supported +$30,000 net adjustment; the correct value is $325,000.
CBS: comparable better, subtract
If the comparable is better than the subject, subtract from it. If the comparable is inferior, as it is here, add to it.
How to use: Use this whenever you need to decide the sign of a comparable adjustment.
Exam Tip
A subject that is superior means the comparable is inferior, so the comparable's price goes up.
Common Mistakes to Avoid
- -Subtracting the adjustment when the subject is superior
- -Reporting the net adjustment as the value
- -Ignoring a supported net adjustment
Concept Deep Dive
Analysis
This question tests applying a signed net adjustment to a comparable sale. The subject is superior overall, so the comparable's price is adjusted upward by the net adjustment. Add the positive net adjustment to the comparable's price.
Background Knowledge
In sales comparison, the appraiser adjusts each comparable's price for differences from the subject. When the subject is superior, the comparable is adjusted upward; when inferior, downward. The net adjustment is the sum of all individual plus and minus adjustments.
Real-World Application
An appraiser values a vacant lot with better views and a larger usable area than a recent comparable sale. After supporting individual adjustments, the net result is upward, so the appraiser adds it to the comparable's price.
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