The subject has a three-car garage. A comparable has a two-car garage, and the market supports $5,000 per garage stall. What adjustment is made to the comparable?
Correct Answer
B) +$5,000
Adjustments are made to the comparable toward the subject. The comparable is inferior by one stall, so $5,000 is added. Subtracting reverses the direction, and $10,000 counts two stalls instead of the one-stall difference.
Why This Is the Correct Answer
Option B is correct because adjustments are made to the comparable toward the subject, and the comparable is inferior by one stall. When a comparable is inferior, the adjustment is positive and is added to its price. 1 stall × $5,000 = +$5,000.
Why the Other Options Are Wrong
Option A: −$5,000
Option A, −$5,000, reverses the direction. The comparable has fewer stalls than the subject, so it is inferior and the $5,000 is added, not subtracted.
Option C: +$10,000
Option C, +$10,000, counts the comparable's two stalls (2 × $5,000) instead of the one-stall difference. The subject has three stalls and the comparable two, so only one stall is adjusted: +$5,000.
Option D: No adjustment
Option D, no adjustment, ignores a supported difference. The market supports $5,000 per stall and the properties differ by one stall, so a +$5,000 adjustment is needed.
Comp worse, price up
If the comparable has less than the subject, add the difference to the comparable's price.
How to use: Use this to set the sign of an adjustment for any missing feature.
Exam Tip
Adjust for the difference between the properties, not for the comparable's total count of a feature.
Common Mistakes to Avoid
- -Subtracting for a feature the comparable lacks
- -Adjusting for the comparable's total stalls instead of the difference
- -Ignoring a supported feature difference
Concept Deep Dive
Analysis
This question tests adjustment direction and the size of the difference. The comparable has one less garage stall than the subject, so it is inferior and its price is adjusted upward. One stall at $5,000 gives +$5,000.
Background Knowledge
In the sales comparison approach, the comparable's price is adjusted to reflect what it would have sold for with the subject's features. If the comparable is inferior, the adjustment is added; if superior, it is subtracted. The adjustment is based on the difference between the properties, not on the comparable's total amount of a feature.
Real-World Application
The subject has a three-car garage, and the best comparable has a two-car garage. Paired sales in the area support about $5,000 per stall. The appraiser adds $5,000 to the comparable's price on the garage line.
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?
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A regression model of 400 sales returns a coefficient of $62 per square foot of GLA. Before using it, the appraiser should confirm:
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