Two verified condominium sales are equivalent in rights, terms, location, floor, condition and all relevant characteristics except sale date, one year apart. The later cash-equivalent price is four percent higher. What does this controlled comparison initially indicate?
Correct Answer
A) A four-percent market-change indication for this controlled comparison
With rights, terms, location, physical characteristics and other relevant influences controlled, the observed four-percent change provides a paired indication of market change over the interval. One pair does not establish a universal rate for every property or segment.
Why This Is the Correct Answer
Option A is correct because with rights, terms, location, physical characteristics and other relevant influences controlled, the remaining four-percent difference reflects market change over the year between the sales. It is an initial indication for this controlled comparison, which other evidence can confirm.
Why the Other Options Are Wrong
Option B: A four-percent appreciation rate for properties across the region
Option B treats the four-percent change as an appreciation rate for properties across the region. A single condominium pair does not establish a rate for all property types and areas in the region.
Option C: A four-percent condition adjustment for the later sale
Option C calls the four percent a condition adjustment for the later sale. The question states the two units are equivalent in condition, so the difference is tied to sale date, not condition.
Option D: Proof that no other market evidence is needed
Option D says the pair proves no other market evidence is needed. One pair is a useful indication, but an adjustment from a single pair may not be valid on its own, so supporting evidence is still valuable.
One difference, one indication
When only one element differs between two sales, the price gap indicates that element, for that pair.
How to use: Use this when interpreting what a controlled paired comparison shows.
Exam Tip
Prefer answers that describe a pair's result as an indication rather than as proof or a universal rate.
Common Mistakes to Avoid
- -Applying one pair's result to an entire region
- -Mislabeling a time difference as a condition difference
- -Relying on a single pair as conclusive proof
Concept Deep Dive
Analysis
This question tests what a controlled paired comparison shows. When two sales are alike in all relevant elements except sale date, the price difference indicates market change over that interval. One pair is an indication for that comparison, not a regional rate or final proof.
Background Knowledge
Elements of comparison include property rights, financing terms, conditions of sale, market conditions, location and physical characteristics. When all but one are controlled, a price difference points to that remaining element. Appraisers usually look for several pairs or other data to support a market conditions adjustment.
Real-World Application
An appraiser finds two nearly identical units on the same floor of a condominium building that sold a year apart, with the later one four percent higher. The appraiser treats this as one indication of market change and checks it against other sales in the building.
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?
A comparable listed at $420,000 and sold for $399,000. What sale-to-list price ratio (sale price ÷ list price) does this indicate?
An appraiser wants to describe the neighborhood boundaries in a Fannie Mae report. Which approach is acceptable?
Which of these is listed by Fannie Mae as a sales or financing concession?
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