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?
Correct Answer
B) $257,000
The only difference is the non-market financing, which inflated the price, so $10,000 is deducted: $267,000 − $10,000 = $257,000. Adding the amount reverses the direction.
Why This Is the Correct Answer
Option B is correct because the only difference between the comparable and subject is non-market financing, which raised the comparable's price. Deducting the supported $10,000 adjustment gives 267,000 − 10,000 = $257,000. The GLA, garage and pool rates do not apply because those features are identical.
Why the Other Options Are Wrong
Option A: $277,000
Option A, $277,000, is wrong because it adds the financing adjustment: 267,000 + 10,000 = 277,000. Non-market financing inflated the price, so $10,000 is deducted, giving $257,000.
Option C: $267,000
Option C, $267,000, is wrong because it makes no adjustment. The comparable sold with non-market financing, so the supported $10,000 adjustment must be deducted, giving $257,000.
Option D: $263,500
Option D, $263,500, is wrong because it uses the garage rate: 267,000 − 3,500 = 263,500. The comparable has no garage difference; the relevant adjustment is the $10,000 financing deduction, giving $257,000.
Good financing, higher price, subtract
Favorable financing boosted what the buyer paid, so remove that boost from the comparable.
How to use: Use this when a comparable sold with below-market or seller-provided financing.
Exam Tip
When a list of adjustment rates is given, apply only those for differences actually present.
Common Mistakes to Avoid
- -Adding a financing adjustment when the financing inflated the price
- -Applying adjustment rates for features that do not differ
- -Ignoring non-market financing on an otherwise identical sale
Concept Deep Dive
Analysis
This question tests picking the relevant adjustment from a list and applying it in the correct direction. The comparable is identical to the subject except for non-market financing. Non-market financing inflated the price, so the $10,000 financing adjustment is deducted.
Background Knowledge
Favorable non-market financing can lead buyers to pay more than they would on cash-equivalent terms. Appraisers adjust such sales downward to reflect cash equivalency. Only adjustments for actual differences between the comparable and subject are applied.
Real-World Application
A comparable sold with seller financing at a rate well below market, and analysis supports a $10,000 effect on price. All physical features match the subject. The appraiser deducts $10,000 and makes no other adjustments.
More Sales Comparison Questions
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?
A comparable went under contract two weeks before the effective date. What does Fannie Mae expect about a time adjustment?
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
The subject property, a 1980s two-story home, has no patio. Comparable 1 has a one-year-old paver patio of the size and quality most homes in the neighborhood have. The one recent pair of sales that differ by a patio also differ in gross living area, condition and lot size, and the market gives no measure of those other differences. A local contractor has quoted a current price to build the same patio. Which evidence better indicates the patio adjustment to Comparable 1?
Next Question
What does bracketing on size mean?