The subject is a single-family home with its own private driveway. Comparable 3 sold subject to a recorded easement that lets the neighboring owner use its driveway to reach a rear garage. Paired sales in the neighborhood show homes burdened by such shared-driveway easements sell for about $8,000 less than similar homes without them. Which adjustment applies to Comparable 3?
Correct Answer
C) An upward adjustment of $8,000 for property rights conveyed
The comparable's buyer received fewer rights than the subject owner holds, because the neighbor's easement limits the use of the driveway. When the rights conveyed differ, the comparable's price is adjusted for that difference, here upward by the measured $8,000 because the comparable is inferior. A downward adjustment runs the wrong way, and conditions of sale concern the parties' motives, not the rights transferred.
Why This Is the Correct Answer
Option C is correct because the comparable sold with a neighbor's right to use its driveway, a lesser bundle of rights than the subject has. The market shows such homes sell for about $8,000 less, so the comparable's price is raised by $8,000 under property rights conveyed to match the subject.
Why the Other Options Are Wrong
Option A: No adjustment, because the easement leaves the comparable a fee simple sale
Option A makes no adjustment on the ground that the sale was still a fee simple sale. The fee was conveyed subject to the neighbor's easement, which limits use and lowered the price by about $8,000, so the rights differ from the subject's.
Option B: A downward adjustment of $8,000 for property rights conveyed
Option B names the right element but subtracts $8,000. The comparable is the inferior property, burdened by the easement, so its price must be raised, not lowered, to reflect the subject.
Option D: An upward adjustment of $8,000 for conditions of sale
Option D places the $8,000 under conditions of sale. Conditions of sale address motivations and market exposure, such as duress or related parties; the easement is a limit on the rights transferred.
Less rights bought, price up
If the comparable's buyer got fewer rights than the subject owner has, the comparable is inferior, so its price is adjusted upward.
How to use: Use this when a comparable sold subject to an easement, covenant or deed restriction the subject lacks.
Exam Tip
Decide direction from the comparable's point of view: inferior comparable, plus adjustment; superior comparable, minus adjustment.
Common Mistakes to Avoid
- -Adjusting in the wrong direction for an encumbrance
- -Ignoring a private easement because the sale was fee simple
- -Recording the encumbrance as a conditions-of-sale issue
Concept Deep Dive
Analysis
The question tests the property rights conveyed element when a private encumbrance burdens the comparable but not the subject. The candidate must decide the direction (the comparable is inferior, so adjust up) and the element (rights transferred, not buyer or seller motivation).
Background Knowledge
Property rights conveyed is the first transactional element. Easements, deed restrictions and similar private limits reduce the bundle of rights a buyer receives, while the subject may hold the full, unburdened bundle. The adjustment reflects the market's measured reaction to the difference.
Real-World Application
A title report for a comparable reveals a recorded access easement for the neighbor's garage. The appraiser finds paired sales on similar lots, measures the discount, and adjusts the comparable upward on the property rights line with an explanation.
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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Previous Question
Two verified otherwise identical cash-equivalent sales differ only in finishing 1,200 square feet of basement. They sold for $432,000 finished and $408,000 unfinished in a stable market. What per-square-foot finish contribution does the pair indicate? A subject has 1,000 square feet, but no transfer or adjustment amount is requested.
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Verification establishes that a neighboring buyer paid a $20,000 premium solely for a purchaser-specific assemblage benefit unavailable to typical competing buyers. Which comparison element describes that special motivation?