Two verified otherwise-matched sales differ only in one bathroom and six months of market time. Sale A at $302,000 has fewer bathrooms; later Sale B with the extra bathroom is $311,000. Evidence supports a simple prorated 4% annual increase on the earlier price, with other material influences controlled. What bathroom contribution is indicated?
Correct Answer
C) $2,960, after removing the time effect
Six months at the stipulated simple 4% annual rate equals 2% of the earlier $302,000 base. Normalize it to 302000×1.02=$308,040. The remaining 311000−308040=$2,960 is the conditional bathroom indication. The raw $9,000 difference ignores time; adding the $6,040 effect instead gives $15,040. This result depends on the expressly controlled remaining differences.
Why This Is the Correct Answer
Option C is correct because six months at 4% per year is 2%, so Sale A normalized to Sale B's date is $302,000 x 1.02 = $308,040. The remaining difference, $311,000 - $308,040 = $2,960, is the indicated bathroom contribution with other influences controlled.
Why the Other Options Are Wrong
Option A: $9,000, the raw difference in prices
Option A, $9,000, is the raw difference ($311,000 - $302,000). It ignores the $6,040 of the difference that came from market movement over the six months.
Option B: $15,040, adding the market movement
Option B, $15,040, adds the $6,040 time effect to the $9,000 raw difference instead of subtracting it. Removing the time effect gives $9,000 - $6,040 = $2,960.
Option D: $4,500, splitting the difference evenly
Option D, $4,500, simply halves the $9,000 raw difference ($9,000 / 2). There is no basis for splitting the difference evenly; the time effect must be calculated: $311,000 - $302,000 x 1.02 = $2,960.
Remove time, then read the pair
Bring the earlier sale forward to the later date first; whatever price gap remains belongs to the feature.
How to use: Use this whenever a paired-sales question includes a time difference.
Exam Tip
Convert the annual rate to the actual holding period before multiplying, and apply it to the price base the stem names.
Common Mistakes to Avoid
- -Treating the raw price difference as the feature's value
- -Adding the time effect instead of removing it
- -Applying the full annual rate to a six-month period
Concept Deep Dive
Analysis
This question tests paired-sales extraction when two sales differ in both a feature and timing. The time effect must be removed before the remaining price difference is attributed to the bathroom. Six months at a simple 4% annual rate is a 2% adjustment on the earlier sale.
Background Knowledge
Paired data analysis isolates the value of one feature by comparing sales that differ only in that feature. When the sales also differ in date, the appraiser first adjusts for market conditions so that the remaining difference reflects the feature being studied.
Real-World Application
An appraiser finds two nearly identical townhouses, one with an extra bathroom that sold six months later in a rising market. After adjusting the earlier sale for the market trend, only a modest difference remains, which the appraiser uses as one indication of the bathroom's contribution.
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?
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Cost Approach
13.6% of exam
Income Approach
8.2% of exam
Previous Question
A comparable sold to a tenant already occupying the property. This transaction may require:
Next Question
A comparable sold for $300,000 and has a superior view that the subject lacks. Verified evidence supports a downward view adjustment of 6.5% of that comparable’s price. Which adjusted price and method statement are appropriate?