An otherwise supported $635,000 indication excludes a particular external influence. Properly controlled market evidence isolates a $42,000 diminution for that influence. No other adjustment is needed. What indication follows?
Correct Answer
B) $593,000
The stipulated isolated diminution is deducted once: $635,000 − $42,000 = $593,000. Its attribution and absence from the baseline are expressly given. An uncontrolled sale-price difference or an effect already present in the baseline would not justify an additional automatic deduction.
Why This Is the Correct Answer
Option B is correct because the isolated $42,000 diminution is deducted once from the baseline indication that excludes it: $635,000 − $42,000 = $593,000. Its attribution and absence from the baseline are given in the question.
Why the Other Options Are Wrong
Option A: $635,000
Option A, $635,000, is the baseline indication with no deduction. It ignores the supported $42,000 diminution; the correct result is $635,000 − $42,000 = $593,000.
Option C: $677,000
Option C, $677,000, adds the $42,000 diminution to the baseline ($635,000 + $42,000) instead of deducting it. A diminution lowers value, so the indication is $635,000 − $42,000 = $593,000.
Option D: $42,000
Option D, $42,000, is the diminution amount alone, not a value indication. It must be subtracted from the baseline: $635,000 − $42,000 = $593,000.
Deduct once, not twice
If the baseline excludes the influence, subtract the isolated diminution once; if the baseline already reflects it, do not subtract again.
How to use: Use it to check whether an external influence is already in the starting figure before adjusting.
Exam Tip
Read the stem for whether the baseline already includes the influence. That determines whether the deduction applies at all.
Common Mistakes to Avoid
- -Ignoring a supported external influence
- -Adding a diminution instead of deducting it
- -Deducting an effect already reflected in the baseline
Concept Deep Dive
Analysis
This question tests applying a market-supported adjustment for an external influence. The baseline indication excludes the influence, and controlled evidence isolates a $42,000 diminution. Because the influence lowers value and is not already reflected, it is deducted once from the baseline.
Background Knowledge
External influences, such as nearby nuisances or traffic, can reduce value through external obsolescence. Market evidence, properly controlled for other differences, can isolate the effect of such an influence. Care is needed to avoid double counting an effect already reflected in the baseline data.
Real-World Application
An appraiser's indication for a house was built from comparables away from a busy highway, but the subject backs onto it. Controlled paired sales in the area isolate the highway's effect, so the appraiser deducts that supported amount once from the indication.
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