A verified pair of cash-equivalent sales in the same market has the superior site/view bundle at $642,000 and a matched property lacking it at $588,000. Rights, terms, time and other material characteristics are matched. A suitable comparable sold for $575,000. The subject is superior in this same feature; the comparable is inferior. Assume the observed contribution applies and no other adjustments. What signed site/view bundle adjustment and adjusted comparable price result?
Correct Answer
D) +$54,000; $629,000
Pair difference=642000−588000=54000; adjustment=54000; comparable price=575000+(54000)=629000. Adjust the comparable toward the subject using the stipulated applicable market contribution, not installation cost or a price inferred solely from the feature label.
Why This Is the Correct Answer
Option D is correct because the paired sales show a $54,000 difference ($642,000 - $588,000) for the site/view bundle. The comparable is inferior to the subject, so it is adjusted upward by $54,000. Its adjusted price is $575,000 + $54,000 = $629,000.
Why the Other Options Are Wrong
Option A: −$54,000; $521,000
Option A, -$54,000 and $521,000, uses the right amount but the wrong sign. Subtracting would be correct only if the comparable were superior; since it is inferior, the adjustment is +$54,000, giving $575,000 + $54,000 = $629,000.
Option B: +$0; $575,000
Option B, +$0 and $575,000, makes no adjustment. The verified pair shows a $54,000 market difference for the feature and the stem says it applies, so leaving the comparable unadjusted ignores a supported difference; the correct price is $629,000.
Option C: +$54,000; $642,000
Option C, +$54,000 and $642,000, has the right adjustment but reports the superior paired sale's price instead of adjusting the comparable. The adjustment applies to the comparable's own $575,000 price, giving $629,000.
Pair finds amount, subject sets sign
The paired sales tell you how much; comparing the comparable to the subject tells you plus or minus.
How to use: Use this two-step check to avoid sign errors in paired sales questions.
Exam Tip
After calculating the paired difference, add or subtract it from the comparable's own price, not from either of the paired sales.
Common Mistakes to Avoid
- -Subtracting the adjustment when the comparable is inferior
- -Using a paired sale's price as the adjusted comparable price
- -Adjusting the subject instead of the comparable
Concept Deep Dive
Analysis
This question tests extracting an adjustment from a matched pair and applying it with the correct sign. The pair shows the site/view bundle is worth $642,000 - $588,000 = $54,000. Because the comparable is inferior to the subject in that feature, the adjustment is positive and is added to the comparable's own sale price.
Background Knowledge
Paired sales analysis compares sales that are alike except for one feature, so the price difference indicates that feature's market contribution. Fannie Mae recognizes paired sales, statistical analysis and modeling as ways to determine adjustment rates. Adjustments are always applied to the comparable, toward the subject.
Real-World Application
Two nearly identical lakefront-area homes sold, one with a premium lake view at $642,000 and one without at $588,000. The subject has the view, but the best comparable does not and sold for $575,000. The appraiser adds $54,000 to that comparable, producing an adjusted price of $629,000.
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
Why must an adjustment analysis identify the intended base and sequence when combining fixed-dollar transaction adjustments with percentage market adjustments?
Next Question
A sale is paid in cash on otherwise typical terms in an all-cash market. Considering only financing equivalency, what is warranted?