A comparable has a cash-equivalent sale price of $662,000. The subject and comparable have the same rights and relevant characteristics except for one permanent real-property feature. Verified market evidence supports a $58,000 contributory difference: the comparable has the superior feature and the subject lacks it. Adjust only the comparable toward the subject. What is its adjusted price?
Correct Answer
C) $604,000
662000 − 58000 = 604000. Subtract because the comparable is superior to the subject. The starting price, adjustment amount alone, and reversed direction do not give the requested adjusted price. The adjustment is supported contributory value, not installation cost.
Why This Is the Correct Answer
Option C is correct because the comparable is superior, so the supported $58,000 contributory difference is subtracted: $662,000 − $58,000 = $604,000. This adjusts only the comparable toward the subject. The adjustment reflects market-supported contributory value, not installation cost.
Why the Other Options Are Wrong
Option A: $662,000
Option A, $662,000, is the starting cash-equivalent price with no adjustment. The supported −$58,000 adjustment for the comparable's superior feature gives $604,000.
Option B: $720,000
Option B, $720,000, reverses the direction by adding: $662,000 + $58,000 = $720,000. Because the comparable is superior, the amount is subtracted, giving $604,000.
Option D: $58,000
Option D, $58,000, is the adjustment amount alone, not an adjusted price. Applying it to the sale price gives $662,000 − $58,000 = $604,000.
Comp Better, Subtract
If the comparable has the better feature, subtract its supported contribution from the comparable's price.
How to use: Use this to set the sign for any single-feature adjustment.
Exam Tip
Check that your answer is an adjusted price, not the adjustment itself, and that its sign matches which property is superior.
Common Mistakes to Avoid
- -Adding the value of a feature that only the comparable has
- -Using installation cost instead of contributory value
- -Reporting the adjustment amount as the adjusted price
Concept Deep Dive
Analysis
This question tests the direction of a single dollar adjustment. The comparable has a superior feature that the subject lacks, with a supported $58,000 contributory value. Adjusting the comparable toward the subject means deducting that amount.
Background Knowledge
Adjustments are made to the comparable property, not the subject. When the comparable is superior, its price is reduced; when the subject is superior, the comparable's price is increased. The amount should reflect the feature's contribution to value as shown by market evidence, which may differ from its cost.
Real-World Application
A comparable has a finished detached guest house that the subject lacks. Paired sales show such guest houses contribute a certain amount in that market, so the appraiser deducts that contribution from the comparable's price.
More Sales Comparison Questions
Supported adjustments are: non-market financing $10,000, GLA $36/sf, garage $3,500 per car, pool/spa $12,500. A comparable identical to the 2,800 sf subject sold for $267,000 with non-market financing. What is its adjusted price?
Using GLA $36/sf and non-market financing $10,000: a 3,100 sf comparable sold for $277,000 with non-market financing; the subject has 2,800 sf. Bath count differences are not adjusted. What is the adjusted price?
Using garage $3,500 per car and pool/spa $12,500: a comparable with a 2-car garage and a pool/spa sold for $268,000. The subject has a 3-car garage and no pool. What is the adjusted price?
Using GLA $36/sf, garage $3,500 per car and pool/spa $12,500: a 2,600 sf comparable with a 2-car garage and a pool/spa sold for $264,000. The subject is 2,800 sf with a 3-car garage and no pool. What is the adjusted price?
In a neighborhood with declining values and marketing times over six months, what must Fannie Mae lenders confirm about the sales comparison analysis?
A house is a 4,000 square foot home in an area of 2,000 square foot homes. How must the appraiser treat this over-improvement in the sales comparison grid?
According to the Interagency Appraisal and Evaluation Guidelines, which items should an appraisal’s market conditions discussion include?
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An appraiser wants to describe the neighborhood boundaries in a Fannie Mae report. Which approach is acceptable?
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