Sensitivity analysis in the sales comparison approach tests:
Correct Answer
C) How the conclusion shifts as an adjustment input varies
Sensitivity analysis varies a relevant input or assumption and observes the change in the conclusion. It can identify influential assumptions but does not by itself validate the original rate, establish statistical significance or replace transaction verification.
Why This Is the Correct Answer
Option C is correct because sensitivity analysis changes a relevant adjustment input or assumption and observes how the conclusion responds. This identifies which inputs have the greatest influence on the result, so the appraiser knows where support matters most.
Why the Other Options Are Wrong
Option A: The appraiser’s fee schedule for the assignment
Option A refers to the appraiser's fee schedule for the assignment. Fees have nothing to do with testing how a value conclusion responds to its inputs.
Option B: Whether each sale was personally inspected
Option B refers to whether each sale was personally inspected. That is a data verification and scope question, not a test of how inputs affect the conclusion.
Option D: Proof that an input is correct because software produced it
Option D treats software output as proof that an input is correct. Sensitivity analysis does not validate an input, and output from software is not by itself proof of accuracy.
Wiggle the input, watch the output
Change one input and watch how much the answer moves. Big movement means that input needs strong support.
How to use: Use this to recognize the definition of sensitivity analysis on the exam.
Exam Tip
Sensitivity analysis measures influence, not correctness; reject choices claiming it proves an input is right.
Common Mistakes to Avoid
- -Treating sensitivity analysis as proof that an adjustment is correct
- -Believing software output validates the inputs used
- -Using sensitivity analysis in place of verifying transactions
Concept Deep Dive
Analysis
This question tests what sensitivity analysis does. It varies an input or assumption and observes how much the conclusion changes. It shows which assumptions are influential but does not prove that any input is correct.
Background Knowledge
Sensitivity analysis is a what-if test: change one adjustment rate or assumption and see how far the indicated value moves. A large change signals that the input deserves strong support. It complements, but does not replace, market evidence and transaction verification.
Real-World Application
An appraiser tests the GLA adjustment at $100 and $150 per sq ft and sees the indicated value shift by $12,000. Knowing this input is influential, the appraiser gathers more paired data to support the rate.
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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Under USPAP Standards Rule 1-4(a), when must an appraiser analyze comparable sales data?
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In a coastal area where many homes have backup power, the subject property has a two-year-old whole-house standby generator, and Comparable 2 has none. No paired sales isolate the generator, and market data show buyers pay about its depreciated replacement cost. The appraiser has four cost figures: a local installer's current bid of $13,500 to install the same model; the manufacturer's current catalog price of $8,900 for that model, which covers the unit only; a cost manual figure for a lower quality class of generator; and the $16,000 the subject's homeowners policy lists as the generator's insured value. Which figure is the best starting point for the adjustment?