Sale A ($302,000) and Sale B ($311,000) are identical except B has a third bathroom and closed six months later in a market rising 4% per year. What does the pair indicate for the bathroom?
Correct Answer
C) $2,960, after removing the time effect
Why this is correct: First, adjust Sale A for market movement. A 4% annual rate equals 2% for six months. $302,000 × 1.02 = $308,040. The price difference after time adjustment is $311,000 - $308,040 = $2,960, which is attributed to the bathroom. Why the other choices are wrong: $9,000 is the raw price difference ignoring time. $15,040 incorrectly adds the time adjustment instead of subtracting it. $4,500 is an arbitrary split with no analytical basis. Exam tip: In paired analysis with a time difference, always time-adjust the older sale to the date of the newer sale first.
Why This Is the Correct Answer
Why this is correct: First, adjust Sale A for market movement. A 4% annual rate equals 2% for six months. $302,000 × 1.02 = $308,040. The price difference after time adjustment is $311,000 - $308,040 = $2,960, which is attributed to the bathroom. Why the other choices are wrong: $9,000 is the raw price difference ignoring time. $15,040 incorrectly adds the time adjustment instead of subtracting it. $4,500 is an arbitrary split with no analytical basis. Exam tip: In paired analysis with a time difference, always time-adjust the older sale to the date of the newer sale first.
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Previous Question
An appraiser develops a $36,000 net adjustment for superior site topography in a residential subdivision. Later, the appraiser discovers that two of the three supporting paired sales involved properties with both superior topography *and* upgraded exterior finishes — features not present in the subject or remaining comparable. What is the most appropriate action per USPAP and SR 1-4?
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A certified residential appraiser applies a 6.5% upward adjustment to a comparable’s sale price for superior view. The subject’s sale price is $320,000. The comparable sold for $300,000 and has the superior view. What is the resulting adjusted sale price of the comparable, and what USPAP principle governs whether percentage or dollar form is permissible for this adjustment?